What boost in capital spending?
George Osborne just made a great deal of fuss about his plans to increase capital spending from 2015/16. The immediate question is – how big is this boost?
The short answer is – there isn’t really one.
Osborne spoke repeatedly about investing £50bn a year and given current public sector net investment is around £25bn a year – these seems like an awful lot, a doubling of investment spend.
However, it appears Osborne was talking about increasing gross rather than net investment spending.
Gross public sector net investment is around £47bn a year and was previously expected to be £50.4bn in 2015/16 according to the OBR (table 4.18).
In other words there doesn’t actually appear to be an increase in capital spending.
How very misleading.
This isn’t a real increase and it is not even scheduled to start for two years, the economy needs a boost now – not smoke and mirrors about the future.