Big Spending to the Rescue: Expansionary Spending in the UK

• The UK Government’s support during the cost of living crisis has totalled over £37 billion in 2022. Almost eight million vulnerable households received £1,200 in a one-off support package. All domestic electricity customers received at least £400 (HM Treasury, June 2022).
• “The Covid-19 pandemic has resulted in very high levels of public spending. Current estimates of the cost of Government measures announced so far range from about £310 to £410 billion. This is the equivalent of about £4,600 to £6,100 per person in the UK.” (House of Commons Library, March 2022).

“The UK Government’s Coronavirus Job Retention Scheme (CJRS) – or furlough programme – provides an example of how the role of the state has had to adapt in the face of the pandemic. This example highlights just how much the state has become entwined in people’s everyday lives during the pandemic. Governments are implementing measures to control the spread of the disease and, in doing so, are forced to create additional mechanisms for employment protection so as to avoid plunging millions of people into joblessness.” (Economics Observatory)

• Austerity involves the reduction of public spending to reduce the budget deficit. This can affect any of the spending types previously discussed, including reducing the public sector pay bill.