Two key things about yesterday's defence announcement: the scale of the top ups was relatively small, increasing defence spending by about 0.1% of GDP each year; the challenge ahead remains large if defence spending is to hit 3.5% of GDP by 2035.
On the Defence Investment Plan top-ups: the political turmoil surrounding top-ups averaging <£4bn/year feels like a small taste of what's in store over the next decade if we want to hit the 3.5% NATO commitment - which would require (much!) more defence money
Max Warner@maxwarner.bsky.social · last mo.3. Zooming out, we've still got a long way to go if the govt still wants to get to 3.5% of GDP by 2035 - current plans only get us about a third of the way there relative to 23-24. Getting to 3.5% could cost an additional £25bn each year in today's terms relative to these plans
As @maxwarner.bsky.social says here, any growth benefits of higher defence spending depend on how it's funded. Rumours this week suggested the govt was considering funding top ups by cutting other investment. This would weaken any case that higher defence spending is an 'engine for growth'
The Institute for Fiscal Studies@theifs.bsky.social · 2mo agoWill higher defence spending increase UK economic growth? Listen to @maxwarner.bsky.social summary of the potential growth impacts at Treasury Select Committee last week @hoccommittees.parliament.uk.
Lots of discussion in recent weeks about how to fund the (much-delayed!) Defence Investment Plan. While this is important, it is only the first step in the longer-term and much larger defence spending increase this government has committed to. A short thread:
The constant rumours around marginally different top ups to defence spending alongside the Defence Investment Plan over the last few months have been frustrating. As Max sets out, the DIP is just one part of the govt's overall plan to increase defence spending and capabilities
Max Warner@maxwarner.bsky.social · 2mo agoI don’t think we should over-focus on the DIP. It’s a good example of the challenges of increasing defence spending given the UK’s fiscal situation. But the govt’s broader commitments for defence spending are much larger and go beyond the next four years
NEW: ‘Help to Buy’ schemes mainly increased affordability for higher earners living in cheap areas, with limited impact on social mobility 🧵 @beeboileau.bsky.social, Lucas Conwell and @peterlevell.bsky.social’s new research examines the impact of Help to Buy on housing affordability: [THREAD]
It is a weird situation where the govt accepted recommendations from a defence review asked to operate ‘within the context of a transition to 2.5% of GDP’, then were near-immediately told the transition to 2.5% of GDP was nowhere near enough to fund the recommendations…
Max Warner@maxwarner.bsky.social · 4mo agoAs per Tim Shipman's story in the Spectator a while ago, this might have caught the government itself off guard spectator.com/article/the-...
From next Monday, the state pension age (SPA) will start gradually going up again from 66 to 67, affecting people born on or after 6 April 1960. What is the rationale for this? What effects might it have on people? And should we expect any further increases? [THREAD]
The Institute for Fiscal Studies@theifs.bsky.social · 4mo agoNEW: The state pension age is going up again this month, increasing from 66 today up to 67 by early 2028. 📗 Jonathan Cribb, @heidikarj.bsky.social and @laurenceobrien.bsky.social’s new briefing explains why and what the evidence tells us about its potential effects: ifs.org.uk/articles/sta...
Today we updated our @theifs.bsky.social spending tool with 2024-25 data! Do have a play around with it if you're having a quiet Friday afternoon - it lets you produce some nice breakdowns of different types of spending, across different areas and over time: ifs.org.uk/calculators/...
NEW PODCAST: The Spring Forecast explained @helenmiller.bsky.social, @benzaranko.bsky.social and @beeboileau.bsky.social discuss the Spring Forecast. We cover rising energy prices and what the big forecast uncertainties mean for government spending plans. 🎧 Listen here: ifs.org.uk/articles/spr...
The Spring Forecast confirmed that the Spending Review next year looks tough. Plans are currently for departmental spending to grow by just 0.9% per year on average in real terms in the next Spending Review period, much slower than planned for the first part of the parliament.
I had a great time chatting about older people with @timharford.ft.com on BBC4 More or Less. The starting question was – are one in four pensioners really millionaires? Quick thread below: www.bbc.co.uk/sounds/play/...
More or Less - The Stats of the Nation - Older People, Education, Prisons and the Weather - BBC Sounds
Tim Harford explores the stats on pensioners, exams, justice and climate change.
bbc.co.uk
Further to this, in a (plausible) scenario presented by the OBR, official plans imply that "unprotected" departments would face cuts of >3% per year, equivalent to more than £20 billion, between 2029 and 2031. That includes police, courts, job centres, colleges, prisons, HMRC, border force... 🤔
Bee Boileau@beeboileau.bsky.social · 8mo agoUnderrated part of yesterday's Budget was what's happening to public service spending in 2028-29. Spending Review settlements reopened just 5 months after the SR to account for loosely-specified 'efficiency savings' of £1.4bn in 28-29 (rising to 4bn in 29-30)
Underrated part of yesterday's Budget was what's happening to public service spending in 2028-29. Spending Review settlements reopened just 5 months after the SR to account for loosely-specified 'efficiency savings' of £1.4bn in 28-29 (rising to 4bn in 29-30)
We've written an explainer going through some of the options available to the Chancellor on departmental spending at next week's Budget:
The Institute for Fiscal Studies@theifs.bsky.social · 9mo agoNEW: What are Rachel Reeves’ options if she decides to change departmental spending at next week’s Budget? 📗 @beeboileau.bsky.social, @benzaranko.bsky.social and @maxwarner.bsky.social explain: ifs.org.uk/articles/cha...
We have a new report out on health & employment in people's late 50s and early 60s. One key finding is these widening gaps in the share of women experiencing depressive symptoms by wealth - likely to be an important headwind for a government looking to boost employment rates.
The Institute for Fiscal Studies@theifs.bsky.social · 9mo agoNEW: Depressive symptoms have risen among women in their late 50s and early 60s, particularly among the least wealthy women. 📗 @beeboileau.bsky.social and Jonathan Cribb's new report examines health, wealth and employment in the run-up to the state pension age: [THREAD]
NEW PODCAST: The end of the peace dividend? UK defence in a changing world 🎧 @helenmiller.bsky.social, @maxwarner.bsky.social & @rusi.bsky.social's Matthew Savill chat all things defence spending: what it covers, how it's changed and what reaching 3.5% of GDP would mean: ifs.org.uk/articles/end...
In new @theifs.bsky.social work, we examine the fiscal challenge of the UK's commitment to higher defence spending. If met, for the first time in a long time health and defence spending would likely rise simultaneously (as a % of GDP). This would change the shape and/or size of the state.
The Institute for Fiscal Studies@theifs.bsky.social · 10mo agoNEW: Honouring the NATO commitment to increase defence spending to 3.5% of GDP by 2035 would reshape the British state. @maxwarner.bsky.social & @beeboileau.bsky.social's new IFS Green Budget chapter, funded by @nuffieldfoundation.org, examines the past and future of UK defence spending: [THREAD:]
Some great charts in this report. This one is my favourite. The UK has signed up the new NATO commitment to spend 3.5% of GDP on defence. The scale of the increase is fiscally challenging, and we've given ourselves a decade. Poland, on the other hand, has done it in just two years.
The Institute for Fiscal Studies@theifs.bsky.social · 10mo agoNEW: Honouring the NATO commitment to increase defence spending to 3.5% of GDP by 2035 would reshape the British state. @maxwarner.bsky.social & @beeboileau.bsky.social's new IFS Green Budget chapter, funded by @nuffieldfoundation.org, examines the past and future of UK defence spending: [THREAD:]
NEW: A response to government commitment to spend 5% of GDP on national security @beeboileau.bsky.social and @maxwarner.bsky.social set out what this could mean for government spending and future fiscal events: ifs.org.uk/articles/res...
ifs.org.uk
Wrote pre-SR in the @observeruk.bsky.social about the pressures on defence spending & the risk that existing plans - which were confirmed at the SR - will need to be topped up in future: observer.co.uk/news/busines...
How tough talk on defence will collide with fiscal reality
How far and how fast to increase defence spending is one of the most contentious questions to be resolved ahead of Wednesday’s spending review
observer.co.uk
The Institute for Fiscal Studies@theifs.bsky.social · last yr.Defence spending is to increase to 2.6% of GDP by 2027–28 including security services, but is to be held at this level after 2027–28. These plans might be revisited at the 2027 Spending Review, particularly if NATO's target increases to 3.5% of GDP.
The govt's allocation of additional investment over this parliament is a good guide to its overall priorities - we're seeing big increases to defence and net zero, with less for more primarily growth-friendly areas (incl a real-terms cut to transport capital over the parliament)
The Institute for Fiscal Studies@theifs.bsky.social · last yr.On capital spending, the biggest cash increases were for defence and net zero-related budgets, rather than those primarily focused on growth (transport and science & technology). www.youtube.com/live/D6Ouus3...
🚨 OUT NOW 🚨 How do spending reviews work? 💷 Tory MP John Glen, former minister Brandon Lewis, former special adviser Sonia Khan and economists @tompope.bsky.social & @beeboileau.bsky.social join @alaintolhurst.bsky.social to look behind the Treasury's spending plans 🎧 Listen here: pod.fo/e/2e0742
NEW: Four big decisions for the 2025 Spending Review @beeboileau.bsky.social, @maxwarner.bsky.social and @benzaranko.bsky.social explain why tough choices will be unavoidable at the upcoming Spending Review in our new briefing:
ifs.org.uk
Lots of discussion today about regional investment. You can use our @theifs.bsky.social public spending tool to explore how much the government currently spends in each region of the UK, what it spends it on, and how that has changed over time: ifs.org.uk/calculators/...
The Guardian@theguardian.com · last yr.Rachel Reeves to announce billions in regional spending after Treasury rule changes
EVENT: A look ahead to the 2025 Spending Review Join us at 11am on Monday 2 June for analysis of the key choices at next month's Spending Review, with speakers @beeboileau.bsky.social and @instituteforgovernment.org.uk's @stuarthoddinott.bsky.social. Sign up here: ifs.org.uk/events/look-...
Rather than doom-scrolling/trying to desperately learn what a ‘Treasury basis trade’ is, why not play with our new tool instead? Allows you to see, in lots of detail, how much the government spends on different things in each region (£, £ per person, % GDP). I’ll post some nice examples later.
Where and how does the government spend its money? | Institute for Fiscal Studies
Explore how and where the government spends money, and how this has changed over time, in all regions and nations of the UK
ifs.org.uk
The Institute for Fiscal Studies@theifs.bsky.social · last yr.All analysis is from our new interactive public spending tool – allowing you to explore how and where the government spends its money – launched today: ifs.org.uk/calculators/... Read our full comment on these regional spending differences: ifs.org.uk/articles/exp...
We've built a new IFS tool which can be used to explore what the government spends money on, and where in the UK benefits from that spending. Here it is: ifs.org.uk/calculators/.... Short thread on what you can do with the tool:
Where and how does the government spend its money? | Institute for Fiscal Studies
Explore how and where the government spends money, and how this has changed over time, in all regions and nations of the UK
ifs.org.uk
The Institute for Fiscal Studies@theifs.bsky.social · last yr.NEW: Where and how does the government spend its money? @beeboileau.bsky.social, @maxwarner.bsky.social and @benzaranko.bsky.social's new interactive tool allows you to explore where and how the government spends money, over time and across the UK. 📊 Explore the data: ifs.org.uk/calculators/...
We’ve written two new reports on the decisions people face when drawing on private pension wealth in retirement & policy reforms that might help improve these decisions. Important to get this right as defined contribution pensions get more important & can now be accessed flexibly. Thread below:
The Institute for Fiscal Studies@theifs.bsky.social · last yr.NEW: Reforms are needed to help people make good use of their pension wealth throughout their retirement and avoid exhausting their wealth too early. New Pensions Review reports funded by @financialfairness.bsky.social look at the rising numbers making complex, risky decisions in retirement:🧵
Looking forward to speaking at this event tomorrow morning on the challenges faced by people managing their pension wealth in retirement. Do come along for some discussion of what one Nobel Prize-winning economist called 'the nastiest, hardest problem in finance' (!)
The Institute for Fiscal Studies@theifs.bsky.social · last yr.Join us tomorrow at 10am for our Pensions Review event, in partnership with @financialfairness.bsky.social, on drawing on pension wealth in retirement, with presentations from Jonathan Cribb & @beeboileau.bsky.social and a response from NEST Invest's Paul Todd. Sign up: