This Graph Shows Why More Enormous Government Spending Cuts Are Coming

George Osborne is just 40% of the way through his planned cuts programme. The next government is going to have to cut spending massively if it wants to meet the deficit reduction target.

UK government spending is falling. But despite all the austerity measures of the last five years, the country is only 40% of the way through the planned government cuts.

OBR

George Osborne is currently on track to balance the books by the end of the decade, according to this graph from a report issued on Wednesday by the independent Office for Budget Responsibility (OBR). It's all part of the chancellor's intention to cut the deficit and ensure the government brings in more money than it spends.

That steeply declining blue line is expenditure by the government as a percentage of the entire UK economy. The shaded area is what's forecast to happen in the future.

But guess what? Despite all the talk of hefty public-sector cuts the UK is actually only 40% of the way through the planned decade-long reduction in government spending, according to these OBR figures. There's a full 60% of the cuts still to come, in addition to the austerity that we've already had.

If Osborne's targets are met it will leave the government spending at just 35% of the UK's economy – the lowest level since the 1920s.

Here's another graph that shows the scale of the challenge. There's going to have to be more cuts. Lots more cuts.

OBR

This graph shows non-capital government expenditure, which the OBR says must keep falling to meet Osborne's targets. The projections for future years are in purple, showing the continued decline in day-to-day departmental spending to just 12.6% of GDP, almost half what it was when the coalition came to power.

But the government has pledged it will not cut the NHS, education, and international development budgets. Which means all other departments will have to find enormous new savings on top of all the cuts that have happened in the last four years.

The effect of these cuts on swathes of government is going to be brutal – if they are actually possible.

This graph show the scale of what's involved. Non-core government services would be pared back even further.

If the health, education, and overseas aid budgets are protected then all the spending cuts need to come from elsewhere. And this means further cuts to departments which have already reduced their spending in recent years.

The OBR, while not allowed to have an official opinion, does suggest these cuts are really, really ambitious. Or, as it puts it, a "significant challenge if they were confirmed as firm policy".

The total sum available for spending outside health, education, and aid would be limited to £85.6 billion a year. Which isn't much when you consider that the Ministry of Defence and the Department for Business, Innovation & Skills currently spend £40.6 billion a year between them.

The OBR report also contains this jargon-heavy statement that suggests the UK will have to cut £14.5billion from the budget in the final year of the decade:

The largest single-year effect of a government decision comes via its new assumption for total spending in 2019­–20, although this does not appear in the Treasury's table of policy decisions. This implies another cut in current spending by central government departments in that year equivalent to £14.5 billion (compared to holding spending flat as a share of potential GDP).

In short, if the UK sticks to the current plan then austerity-driven spending cuts have barely begun.