Current economic context

The UK economy is currently still mired in one of the most prolonged economic downturns since the economic depression of the 1930s (1)(2).

It is now nearly five years since the start of the recession and UK GDP remains around 4 per cent below the level it was in 2008.

The impact of the banking crisis and the recession and the government’s response on the nation’s economy has been significant (3):

  • national debt in 2007/8 was 36.4 per cent of GDP: in 2011/12 it was 66.1 per cent.
  • government borrowing to bridge the gap between revenue and spending was £37 billion in 2007/8: in 2011/12 it had more than trebled to over £120 billion.

The period of austerity is set to continue to 2017. While the 2012 Autumn Statement confirmed some protection for the NHS into 2015, future prospects are unclear. Further financial protection for the NHS would mean a combination of significant cuts in other spending areas and tax increases.

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References

  1. National Institute of Economic and Social Research (2012). Press release. Estimates of monthly GDP: December 2012
  2. Office for Budgetary Responsibility (2012). Report. The economic and fiscal outlook
  3. Office for National Statistics (2012). Statistical Bulletin. Public sector finances, September 2012