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Wednesday, 10 June 2009

The engines cannae take it any more, cap'n.

Oh, such is the wailing from the NHS Confederation you would think that the end of the world was nigh. Apparently the NHS will cease to exist if the £110 billion budget is not increased in real terms. I'll say that again for the benefit of those who might have missed it: £110 billion, or as near as damn it a quarter of all the money raised through taxation.

Are we spending more or less than the rest of the world?

Well, here are the figures for government health spending as a percentage of GDP from 2004 for the 25 most developed countries:

Iceland 8.3, France 8.2, Germany 8.2, Norway 8.1, Austria 7.8, Sweden 7.7, Luxembourg 7.2, Denmark 7.1, United Kingdom 7, United States 6.9, Belgium 6.9, Canada 6.8, Switzerland 6.7, Australia 6.5, New Zealand 6.5, Italy 6.5, Japan 6.3, Israel 6.1, Ireland 5.7, Netherlands 5.7, Finland 5.7, Spain 5.7, Greece 4.2, Singapore 1.3, Hong Kong 0.

So that puts the UK on 7% at about ninth place. Except that as we now know in 2011 it will be £110 billion out of around £1,400 billion GDP, which would be 7.9 %, enough to put the UK in 5th place.

But hang on. We know that £175 billion of UK GDP is not self sustaining economic activity, but pump priming financed by egregious government borrowing. A more sustainable level of borrowing would be the supposed limit on budget deficits for the Euro area, 3% of GDP or about £50 billion. So to put the UK's spending in perspective, let us compare NHS spending with what we might term "UK long term sustainable GDP", which would be £1,400-175+50 billion, or £1,275 billion.

That gives a figure of 8.6% of GDP which puts the UK NHS in first place.

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