Politicians talk a lot about the economy. Ordinary people talk a lot about the economy, especially when it is going badly. Everyone talks about government expenditure and how much tax is needed to pay for it all. For all the talk, you get very few numbers. When you listen to people, you often hear strange things like “if they stopped wasting all that money on such-and-such then they could pay for this-and-that”. The flaw in such arguments tends to be that they rely on a mixture of wishful thinking and absolute ignorance of the numbers involved. Very rarely do people know the numbers. A few million, a few billion, a few trillion… they all sound like big figures. So if the government saves a few million in one place, will that saving pay for new initiatives costing a few billion elsewhere? Of course not.
I sometimes ask friends how much they think the UK government spends each year, or how big a slice of the UK economy that is, or how much the UK borrows to pay for spending, or which taxes generate most income for the government. Somehow I still have friends, despite this odd habit of mine. By and large, most have no idea. Big number blindness affects even well-informed people. One explanation is that you do not see the most basic numbers about the economy being presented in the news on a regular basis. I guess that may be because such numbers, in normal circumstances, are not very entertaining. Even a news service must be interesting as well as informative. Perhaps journalists, by their nature, tend to be interested in words and not numbers. Maybe the numbers are so large, they become meaningless for most people. When numbers about public sector taxation and spending are given in the news, they are usually presented without any context. If there is context, it usually one with a political slant, or a combination of political slants if the journalist is being impartial in that lazy way of repeating all the conflicting nonsense spouted by political rivals and abdicating to the audience to decide who is guilty of the greater distortion. Rarely do you see simple, uninterpreted, but vital facts. Even when the government presents its budget, most of the reporting seems to focus on mundane daily costs. By this theory, we all live and make decisions from day to day, such as whether to buy a bottle of whisky or fill up our cars. The impression is that we have no idea, or simply do not care, that the size of the economy or the amount the government borrows might have a more lasting impact on our lives than a change in the cost of a pint of beer. There is reporting of interest rates and inflation, but the prevailing tendency seems to be to only mention the metrics where individuals can easily understand the direct impact on their lives. I suppose that no amount of numerical repetition would engage the interest of innumerate people, though I wonder why that does not stop innumerates from having opinions on the economy or where their tax money is spent. So this is me taking a chance on writing possibly the most boring blog post ever. For those of you who care to know, read on for a summary of some of the big numbers relating to the UK economy, government and taxation. For the rest, I am sure ignorant innumeracy is bliss… even though your one vote counts just the same at election time.
Gross Domestic Product: UK£1.26 trillion
Net worth of the UK: UK£6.53 trillion
Largest component of UK net worth: Housing, worth UK£3.92 trillion (60% of the total)
Public expenditure 2007-8: UK£583 billion
Central government expenditure 2007-8: UK£420 billion
Local government expenditure 2007-8: UK£155 billion
Public sector net debt at August 2008: UK£633 billion
Total tax and National Insurance take 2007-8: UK£516 billion
Total tax and NI take broken down by top categories: 28% income tax, 17% NI, 15% VAT, 9% corporation tax
Total social security benefits expenditure 2006-7: UK£133 billion
Total expenditure on health 2006-7: UK£92.7 billion
Total expenditure on defence 2006-7: UK£33.5 billion
Central government gross debt interest 2006-7: UK£27.6 billion
Total expenditure on transport 2006-7: UK£16.4 billion
Transfers to the EC 2006-7: UK£4.7 billion
Total expenditure on international development 2006-7: UK£4.4 billion
Total expenditure on BBC domestic services 2006-7: UK£3.2 billion
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