This 2002 edition of OECD's periodic review of the UK economy examines recent economic developments, policies and prospects and includes special features on raising productivity and managing public expenditure.
- 23 Nov 2001
Managing Public Expenditure
Currently, the UK’s fiscal situation and outlook is better than for many years, with expenditure now financed without heavy recourse to borrowing. This has been the combined result of sustained fiscal rigour during much of the 1990s and a firm recovery from the recession that hit the economy at the beginning of the decade. The attention has now turned to consolidating this achievement while tackling with priority the sorely needed improvement in the quality of several key public services, such as education, health care and public transport. Traditionally, budget managers at all levels of the administration have had to grapple with strict top-down allocation of funding across spending departments, programmes and – importantly – public enterprises on an annual basis. This feature and decisions to consolidate the budget without raising taxes has led to a squeeze of discretionary investment spending over time and a deterioration of public service provision. The need to address these deficiencies motivated the present government, after it took office in 1997, to develop a new framework for fiscal management and to continue the emphasis on mobilising the private sector where this is expected to yield gains in operational efficiency.