Figures released in Wednesday’s Budget confirm the UK has recorded its highest peacetime deficit in modern history, while the tax burden is forecast to reach the highest level since the start of the 1950s.
Here are some of the historic markers against which Rishi Sunak’s Budget can be measured.
– Highest deficit (as % of GDP) since 1945/46
Government borrowing during the pandemic hit its highest level since the end of the Second World War.
The Office for Budget Responsibility (OBR) said the deficit for 2020/21 reached the equivalent of 15.2% of GDP (gross domestic product, or the total value of the economy).
This is highest level since 1945/46, when the figure also stood at 15.2%.
It easily beat the level of borrowing seen during the financial crash, when the deficit reached 10.1% of GDP in 2009/10.
– Highest debt (as % of GDP) since 1962/63
Public sector net debt in the UK in 2021/22 is forecast by the OBR to reach the equivalent of 98.2% of GDP.
This would be the highest level the end of the financial year 1962/63, when debt stood at 98.3% of GDP, a time when Harold Macmillan was prime minister and The Shadows were at the top of the singles charts with the guitar instrumental Foot Tapper.
– Highest tax burden (as % of GDP) since 1949/50
The tax rises announced by Rishi Sunak push up the tax burden from the equivalent of 33.5% of GDP in 2019/20 to 36.2% by 2026/27: the highest level since 1949/50, when Sir Stafford Cripps was chancellor in the Labour government of Clement Attlee.
Taking both of this year’s Budgets together, the chancellor has raised taxes by more in 2021 than in any single year since Norman Lamont and Ken Clarke’s two 1993 Budgets in the aftermath of Black Wednesday.
– First rise in corporation tax since 1974
Part of the reason for the increase in tax burden is the rise in corporation tax to 25% from April 2023, which was first announced in the Budget of March 2021.
It is the first time this particular tax has been increased since Denis Healey raised it from 40% to 52% in March 1974.
Since 1974 the tax has only ever been held at the same level or reduced, until now.
– Highest spending (as % of GDP) since 1945/46
The total amount the Government is calculated to have spent in 2020/21, otherwise known as Total Managed Expenditure (TME), is £1.12 trillion.
It is the equivalent of 53.1% of GDP, the highest level of TME since 1945/46, when it stood at 55.2%.
Spending is forecast to stabilise at 41.6% of GDP from 2024/25 onwards: the highest sustained level since the late 1970s.
– Worst economic growth for a century
A year ago, the OBR estimated that GDP for 2020 would end up falling by 11.3%.
This would have ranked as the largest drop in annual economic output since the so-called Great Frost of 1709, when the UK, along with the rest of Europe, was plunged into one of the coldest winters in modern history.
This turned out to be an overestimate, with GDP in 2020 actually falling by 9.8%.
But this still ranks as the biggest drop since 1921, when the economy shrank by around 10%, according to Bank of England figures.
Comparable annual data for GDP published by the Office for National Statistics begins in 1949, and by this measure a drop of 9.8% would be the biggest on record.
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