The level of government spending, the public sector’s role in the economy and the government’s productivity record are worrying. The first and most obvious concern is that general government spending on goods and services has been growing so much faster than GDP. This has led to a substantial structural budget deficit at a time when, after 14 consecutive years of growth, the budget ought to be in surplus. Measured in cash terms, general government spending on goods and services rose 67% between 1997 and 2004, compared with an increase in GDP of 43%.
