Election 2015: Debt and Deficit

30 April 2015

The deficit measures the gap between money going into government, and money going out. If the government spends more than it receives, it is in deficit. Otherwise it is in surplus. You can find our full article on the deficit here.

In 2014-15 the deficit is estimated to have been about £90 billion, or £60 billion if you don't include investment spending.

This is different from government debt, which measures how much the government owes in total. In February 2015 the debt was estimated to be about £1.5 trillion, or 80% of GDP. This figure excludes public sector banks.

Common claims:

"Five years ago, the budget deficit was more than 10% of GDP, the highest in our peacetime history"

The deficit in 2009-10 was 10.2% of GDP.

The Office for Budget Responsibility have data from 1948 onwards, and this is the highest the deficit has been in this period.

It was also the highest in cash terms at £154 billion, and the highest when adjusted for inflation.

"The deficit has been halved"

This is correct when looking at the deficit as a proportion of the UK's economic output (GDP) each year: this has gone from 10% in 2009-10 to 5% in 2014-15.

The absolute value of the deficit has not halved, though. Over the same period it went from £154 billion to £90 billion.

Reducing the deficit is not the same as 'paying down the debt'.

"George Osborne has borrowed more than he claimed he was going to back in 2010?

The government is borrowing more than it planned to: the Institute for Fiscal Studies says that from 2010/11 to 2014/15 the government has borrowed approximately £100 billion more than it planned to at the start of this parliament.

However, this is not due to a failure to cut spending; it's just that the economy hasn't performed as well as was expected. This means the government has raised less money in tax.

"The Coalition have failed to meet their deficit targets"

The Coalition is set to meet their supplementary target to have debt falling as a proportion of GDP. The balanced budget part of the mandate only requires that the government plan for a balanced budget three years in the future.

As the IFS point out, the government can technically meet this moving target without ever achieving budget balance.

"The debt has doubled"

Debt has risen, but not doubled. It has risen from just under £1 trillion in April 2010 to about £1.5 trillion in February 2015. As a proportion of GDP, it's risen from just over 60% to 80%

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