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PARTS of the United Kingdom have become so heavily dependent on government spending that the private sector is generating less than a third of the regional economy, a new analysis has found.
The study of “Soviet Britain” has found the government’s share of output and expenditure has now surged to more than 60% in some areas of England and over 70% elsewhere.
Experts believe the recession will tighten the state’s grip still further as benefit handouts soar and Labour directs public sector organisations to create jobs to soak up unemployment.
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In the northeast of England the state is expected to be responsible for 66.4% of the economy this year, up from 58.7% when a similar study was carried out four years ago. When Labour came to power, the figure was 53.8%.
The northwest has seen a similarly relentless advance by the state, according to the research commissioned by The Sunday Times from the Centre for Economics and Business Research (CEBR).
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“Labour has failed to encourage private sector investment across the country. Instead of supporting enterprise and small businesses, Gordon Brown has used the public sector to cover up his failures,” said Theresa May, the shadow work and pensions secretary.
The CEBR reached its estimates for 2008-9 by applying the 6.68% state spending increase announced in November’s prebudget report evenly across the country, although in practice some regions will receive more than others.
