The iceberg beneath...
In the aftermath of the Budget the scale of the crisis in public finances has become clear...
It is now likely that in 2010 government spending will account for in excess of 52 per cent of GDP whilst government revenues will amount to less than 39 per cent. The titanic gap between income and spending is on a scale normally associated only with an economy under extreme stress – such as in wartime – and yet only a small part of it is due to the recession. The vast bulk is structural and has been built up over many years of increasing expenditure. The remedy must be spending cuts on a scale not seen for more than a generation, cuts which will impact all areas of government activity. Inevitably they will have an extreme effect on wide swathes of the charity sector but in particular for those charities receiving significant support from government sources.
Author: John Kelly
John Kelly is head of client investment at CCLA.
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