Press releases

Controlling Public Spending and Government Deficits, think tank Policy Exchange’s latest report on public spending, examines six historical episodes of spending cuts in the UK, and six recent international cases. It considers the economic environment in detail, including extensive analysis of fiscal and monetary events and detailed breakdowns of spending cuts.

Policy Exchange Director Neil O’Brien said:

“On average in the 12 case studies we looked at, governments cut spending by over 6% of GDP – equivalent to about £90 billion in Britain today. On average they grew 3% a year over the four years following the cuts, suggesting that getting debt under control helps recovery and growth.”

Policy Exchange’s Chief Economist and author of the report Andrew Lilico said:

“We found that a number of countries which cut their deficits benefited from lower long term interest rates and higher confidence, leading to faster growth as a result. However, it is important that most of the deficit reduction effort should come from spending cuts not tax rises. We found that countries which tried to fix their finances mostly with tax rises have tended to fail.”