Across the whole of the UK, 49% of the economy will consist of state spending, while in Wales, the figure will be 71.6% – up from 59% in 2004-5. Nowhere in mainland Britain, however, comes close to Northern Ireland, where the state is responsible for 77.6% of spending, despite the supposed resurgence of the economy after the end of the Troubles.
Even in southern England, the government’s share of spending is growing relentlessly. In the southeast, it has gone up from 33% to 36% of the economy in four years.
The state now looms far larger in many parts of Britain than it did in former Soviet satellite states such as Hungary and Slovakia as they emerged from communism in the 1990s, when state spending accounted for about 60% of their economies.
Large-scale layoffs in the northeast will mean a rise in benefit payments. Newcastle-based Northern Rock was nationalised last year and has shed 1,500 jobs. Nissan announced three weeks ago that it was to cut its workforce in Sunderland by 1,200.
This explains a lot of the stories that come out of Great Britain. When the state has a Soviet size share of the GDP it will have Soviet type powers.
But such sniping aside, this shows how the economic health of Great Britain is dependent on the economic health of the government of Great Britain. Much of the money that sustained the government came from oil and gas revenues from the North Sea and the financial services industry in the city of London. Now that energy prices are falling around the world and the financial services industry is getting hammered, who is going to fund the government of Great Britain?