ACT 322 Sec: 01

Trend Analysis:
Government Revenues & Expenditures of UK
Submitted By: Submitted To: Mr. Muin Uddin Ahmed

Suvam Agarwal 142 0097 030 Muhtasim Samaun 133 1027 030

Afra Nawar 133 0265 030

Letter of Transmittal
August 20, 2017
Mr. Muin Uddin Ahmed (AhU)
Lecturer,
Dept. of Accounting & Finance (BBA)
North South University, Dhaka, Bangladesh

Subject: Submission of Group Project

Dear Sir,
We are pleased to present to you our group project, which involved doing this report on the trend
analysis of all government revenues and expenditures of United Kingdom. We focused mainly on the
sources of government revenues and sectors of expenditures during the period from 2012 to 2016.
This report is to describe our observation, research, learning and recommendation based on the
knowledge and the experiences gained during the course under your supervision.

We have tried to cover all the requirements according to the guideline you gave us for this project. If
you have any inquiry or need for clarification regarding this project, please let us know. Thank you
for your time, guidance, and for providing us with this opportunity to learn.

Sincerely,
SUVAM AGARWAL _____________________
MUHTASIM SAMAUN _____________________
AFRA NAWAR _____________________
Acknowledgements
The development of this report on the trend analysis of UK’s sources of revenues and sectors of
expenditures by the grace of God, our family and friends. We would like to thank our faculty Mr.
Muin Uddin Ahmed Sir for his help to guide our assignment work. Without the help of these people,
our research paper would not have taken place appropriately
Table of Contents

Name of the Contents Page Number

1. Introduction
1

2. Economic Conditions of UK
2-3

3. Sources of Government Revenue of UK

4-15

4. Sectors of Government Expenditure of UK

16-26

5. Budget Deficit & Public-Sector Net Cash Requirement

27

6. Suggestion & Conclusion

28

7. Annexure: References
29-30
Introduction
The country of United Kingdom that includes are England, Scotland, wales and Northern
Ireland. The United Kingdom is a part of Europe which is located in Western Europe it is also
known as UK in short or Britain. It’s also well known as a sovereign country. It is known as
the home of both parliamentary democracy and the industrial revolution. The United Kingdom
is a developed country and has the world's fifth-largest economy by nominal GDP. The UK is
considered to have a high-income economy. Its capital is London which is a globally influential
centre of finance and culture. The currency that flows is pound sterling. The UK's central bank
is known as the Bank of England. The current population of the country is 65.64 million. The
head of state is Queen Elizabeth II and the current prime minister is Theresa May. Also, the
United Kingdom has a great history. The famous writers Shakespeare born in England also the
Beatles home country is England.

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Economic Conditions of United Kingdom
The United Kingdom (UK) has made significant contributions to the world economy,
especially in technology and industry

According to the economic position UK is the second largest in the European Union. The
service sector maintains an important role throughout the world and the financial service sector
where we already mentioned London is the world’s largest financial centre. (Wikipedia, n.d.)

In economy of UK it includes production, distribution, consumption and trade of goods and

services. All of the factors that are individuals, businesses, organizations and governments all
affect the development of the economy. From this the GDP is the main of the economy in UK
that measures the economic growth of UK based on the value of goods and services produced
during a given period of time.

Moreover, the national accounts of UK also play an important role for the economy. It is the
centre for the economy as a whole. The national accounts framework brings units and
transactions together to provide a simple and understandable description of production, income,
consumption, accumulation and wealth. ( Office for National Statistics, 2017)

UK economic activity includes production, distribution, consumption and trade of goods and
services. All of the factors that are Individuals, businesses, organizations and governments all
affect the development of the economy.

However, in the recent years the UK is now the worst-performing advanced economy in the
world. Inflation has risen drastically in an unexpectedly way in the year 2016 that also made
imports more expensive. Recent business surveys have suggested the UK economy has picked
up some momentum in the second quarter after its slow start to 2017. But with higher inflation
weighing on consumer spending, most forecasters expect growth to be lacklustre over 2017 as
a whole and even weaker in 2018. The main pressure is expected to come from higher inflation,
stemming largely from the pound’s sharp fall since the Brexit vote last year. That has made the
many imported goods to the UK more expensive and been passed on to consumers. Wages
meanwhile have failed to keep pace with those price rises and so workers are worse off in real
terms and have been cutting back.

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On the other hand, World Bank also concludes that the economic performance of UK aided by
accelerating growth from the recent year. It mainly pointed to a pickup in manufacturing and
trade, rising market confidence and stabilizing commodity prices as factors that will allow
growth to resume in emerging and developing economies.

Therefore, the great economist predicts that in the year 2017 UK economic condition will be
improved in a better way so that also UK will get overcome its economic problem soon.

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Sources of Government Revenue of UK
The major sources of Government Revenue of UK include Income and Capital Taxes, National
Insurance, Indirect taxes (including Excise Tax, Value Added Tax, Property, Transportation
and others), Business and Other Revenue. The below table shows the amount of revenues from
each source over the period between 2012-2016:

Sources of 2012 2013 2014 2015 2016 Average

Revenues (£ billion) (£ billion) (£ billion) (£ billion) (£ billion) (£ billion)
Income and
203.7 200.4 206.9 216.5 225.7 210.64
Capital Taxes
- Income Tax 200.1 196.6 201.8 212.2 220.3 206.2
-- Individual
157 156.2 161.5 169.2 175.9 163.96
Income Tax
-- Corporate
43.1 40.5 40.3 43 44.4 42.26
Income Tax
- Capital Tax 3.6 3.8 5.1 4.3 5.5 4.46
National
101.6 104.5 107.3 110.3 114.1 107.56
Insurance
Indirect Taxes 250 254.6 268.8 278.1 289.3 268.16
- Excise Tax 28.8 27.9 29.1 28.5 29 28.66
- VAT 135.3 138.8 145.3 150.4 157.3 145.42
- Property 24.5 24.9 26.1 26.9 27.8 26.04
- Transportation 32.9 33.5 36.3 38 38.9 35.92
- Others 28.4 29.5 32 34.3 36.2 32.08
Business and
48.1 60.7 65.7 66.7 65.4 61.32
Other Revenue
Total Revenue 603.4 620.2 648.7 671.6 694.5 647.68
Figure 1: Sources of Government Revenues of UK during the period 2012-2016

Sources of Government Revenue in UK

250
200
£ BILLION

150
100
50
0
2012 2013 2014 2015 2016 Average

YEAR
Income and Capital Taxes National Insurance -Excise Tax
-VAT -Property -Transportation
-Other Business and Other Revenue

Table 1: Sources of Government Revenues of UK during the period 2012-2016

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The above composition can also be shown through a pie chart based on the average calculated
from the amount in between the period 2012-2016:

SOURCES OF GOVERNMENT REVENUES OF UK

-Other Income and Capital
Business and Other Revenue
5% Taxes
9%
-Transportation 33%
6%

-Property
4%

-VAT
22% National Insurance
-Excise Tax 17%
4%

Figure 2: Pie Chart representing Sources of Government Revenues of UK

Income and Capital Taxes

The first major source of government revenue is Income and Capital Taxes. Income taxes
include both the individual income tax and corporate tax. Capital tax include taxes on
miscellaneous income and wealth, for example, capital gain tax.

Individual income tax rate is tax collected and imposed on difference income sources of
individual like labour, pensions, interest and dividends. Individual income tax rate limit for UK
is currently at 45% constant over the last 4 years. It averages 42.27% over the period 1995-
2016, reaching a high rate of 50% in 2010 and recorded a low rate of 40% in 1996.

Figure 3: Individual Income Tax Rate of UK over the period 2007-2016

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The corporate tax rate is collected from companies which is imposed on the net income balance
during their business year. It currently stands at 20% and averages around 31.95% from the
period of 1981 to 2016. It recorded a high rate of 52% in 1982 and a low rate of 20% in 2015.

Figure 4: Corporate Tax Rate of UK over the period 2007-2016

From the above table, we can plot the figures of Income and Capital Taxes over the period
2012-2016 and identify a trend as shown below:

Income and Capital Taxes

240

230 225.7
216.5
220
£ BILLION

210
203.7
206.9
200
200.4
190

180
2012 2013 2014 2015 2016
YEAR

Figure 5: Graphical Plotting of figures of Income and Capital Taxes over the period 2012-2016

From the above plot, we can see an increasing trend of Income and Capital Taxes over the
period 2012-2016. It reached a high balance of £225.7 billion in 2016 and recorded a low
balance of £200.4 billion in 2013 due to a slight fall in income tax. The trend is an upward
increasing trend because from the figures we can see that, income tax i.e. both individual and

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corporate tax, as well as capital tax is increasing in this period just after a slight decline in
income tax in 2013. Therefore, it can be expected or forecasted that the figures would continue
to increase in future according to the trend.

National Insurance
The second major source of government revenue is National Insurance. National Insurance is
a government operated social security scheme that includes income loss, sickness, and
maternity welfare, and retirement support and pension, to the working population. National
insurance is funded by regular contributions which is based on their wages and salaries by
employees and employers, and of course by the government through taxation. It is also called
the Social Security rate. It is used to pay for many social programs of the government including
welfare, healthcare and other benefits.

The National Insurance tax rate is the result of contributions from the working population of
the country. The most recent National Insurance tax rate is 25.8 percent accumulated for both
employer and employee, which has been persistent for the last 6 years i.e. 2011- 2016. Before
that it was 23.8 percent from 2007- 2010.

Figure 6: UK Social Security Rate for both employer and employees during the period 2007-2016

For employees, the social security rate currently stands at 12% which has been constant from
2012 to 2016.

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 Figure 7: UK Social Security Rate for Employees during the period 2007-2016

For companies, the social security rate stands at 13.8% which is also constant during the period
2012-2016.

Figure 8: UK Social Security Rate for Employer during the period 2007-2016

From the above table, we can plot the figures of National Insurance contribution over the period
2012-2016 and identify a trend as shown in the next page:

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 National Insurance
125

120
114.1
115
110.3
£ BILLION

110

105 107.3
104.5
100 101.6

95

90
2012 2013 2014 2015 2016
YEAR

Figure 9: Graphical Plotting of figures of Nation Insurance over the period 2012-2016

From the plot, we can see an increasing trend of National Insurance Taxes over the period
2012-2016. The above graph we can contemplate the revenue from National Insurance grew
up to £114.1 billion in the year 2016. On the other hand, in 2012 it had downgraded £101.6
billion; as the years passed the national insurance revenue increased, as UK was getting out of
the economic breakdown of 2008-2009. The trend is upward and increasing in the above plot;
the data in the graph shows clear result of increasing, thus growth is inevitable (except for
unnatural causes) in the coming years also.

Indirect Tax
An indirect tax is a tax that is paid by one entity in the supply chain to the government and is
also passed on to the consumer as part of the price of good or services, usually because more
value is added to the goods when goods are exchanged from one entity to another and to the
ultimate consumer. The consumer is ultimately paying the tax by paying more for the product.
An indirect tax is shifted from one taxpayer to another. The categories under Indirect Tax for
UK are given below along with their trend analysis:

Excise Tax
Tax paid to the government for particular goods like alcoholic substances, cigarettes/tobacco,
or petrol which the government aims to discourage consumption.

From the above table, we can plot the figures of Excise Tax over the period 2012-2016 and
identify a trend as shown in the next page:

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 -Excise Tax
29.2 29.1
29
29
28.8 28.8
28.6
£ BILLION

28.4 28.5
28.2
28
27.8 27.9
27.6
27.4
27.2
2012 2013 2014 2015 2016
YEAR

Figure 10: Graphical Plotting of figures of Exercise Tax over the period 2012-2016

The lowest taxes collected was in the year of 2013, amounted £27.9 billion and highest resulted
in the year 2014 amounted £29.1 billion. In 2016, it jumped back from £28.5 billion (on its
previous year) to £29 billion. So, chances are high that the revenue earned from excise tax
would be increasing in the next few years. Even though the plots are fluctuating in every
respective year from 2012 to 2016 but we can see the trend shows that the revenue from Excise
Tax would be growing in the coming years as the trend is a little bit upward sloping.

Value Added Tax

A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever
value is added at a stage of production and at final sale of the product. The amount of VAT that
the user pays is the cost of the product, less any of the costs of materials used in the product
that have already been taxed.

From the above table, we can plot the figures of VAT revenues over the period 2012-2016 and
identify a trend as shown in the next page:

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 -VAT
180

170

160 157.3
150.4
150
£ BILLION

145.3
138.8
140

130 135.3

120

110

100
2012 2013 2014 2015 2016
YEAR

Figure 11: Graphical Plotting of figures of Value Added Tax over the period 2012-2016

The Revenue from VAT escalated from £135.3 to £157.3 billion from 2012 to 2016. The
reasons could be acceleration of world economic growth; the steady increase in international
commodity and mineral prices also changes made for the progression of VAT and Income Tax
administration. From the above trend, we can conclude that in the upcoming years the VAT
revenue will also increase.

Property
Property tax is a tax assessed on the sale of real estate. The tax is usually based on the value of
the property (including the land) you own and is often assessed by local or municipal
government. This tax is mainly used by municipalities for repairing roads, building schools and
snow removal, or other similar services.

From the above table, we can plot the figures of property tax over the period 2012-2016 and
identify a trend as shown in the next page:

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 -Property
30
29
27.8
28
26.9
27
26.1
£ BILLION

26 24.9
25 24.5
24
23
22
21
20
2012 2013 2014 2015 2016
YEAR

Figure 12: Graphical Plotting of figures of Property Tax over the period 2012-2016

The above plot graph lets us contemplate the verdict that in couple of years the revenue earned
from Property tax will increase. In 2012 the government earned a revenue of £24.5 billion
which rapidly progressed to £27.8 billion in 2016. And there was no fluctuation of income,
which shows the income coming from properties are increasing. Thus, it’s a positive trend.

Transportation
Transportation tax is levied on vehicles, ships and aircraft using public highways, rivers, and
airports maintained by the government.

From the above table, we can plot the figures of Transportation taxes over the period 2012-
2016 and identify a trend as shown in the next page:

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 -Transportation
45
43
41 38.9
39 38
£ BILLION

36.3
37
35 33.5
33
31 32.9
29
27
25
2012 2013 2014 2015 2016
YEAR

Figure 13: Graphical Plotting of figures of Transportation Tax over the period 2012-2016

The trend shows that the growth has accelerated from £32.9 billion to £38.9 billion in five years
of time. There is no stopping in the growth, thus giving us a verdict from the plot that it is very
much likely that in 2017 and so on, the revenue from this sector would just increase; have a
positive outlook.

Other Indirect Taxes

From the above table, we can plot the figures of other indirect taxes over the period 2012-2016
and identify a trend as shown below:

-Other
45

40
36.2
£ BILLION

35 34.3
32
29.5
30
28.4
25

20
2012 2013 2014 2015 2016
YEAR

Figure 14: Graphical Plotting of figures of Other Indirect Tax over the period 2012-2016

The above plotting and through a trend analysis, we can conclude that revenues from other
indirect tax has increased from £28.4 billion to £36.2 billion during the period 2012-2016. The

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upward trend also predicts that the revenue from other indirect taxes would be increasing in
the upcoming years.

Business and Other Revenue

These are the revenues of UK government from its investment in different sectors (Public
Sector). From the above table, we can plot the figures of government revenues from Business
and Others over the period 2012-2016 and identify a trend as shown below:

Business and Other Revenue

90
80
66.7
70 65.7
60.7
60 65.4
£ BILLION

50
48.1
40
30
20
10
0
2012 2013 2014 2015 2016
YEAR

Figure 15: Graphical Plotting of figures of Business and Other Revenue over the period 2012-2016

The graph shows that from 2012 to 2016 the revenue from business and other revenue have
grown, reached maturity and declined although the trend illustrates a different output in the
future. Probably in the year 2016 there had been some unnatural factors which played a role to
decline the revenue from £66.7 billion in 2015 to £66.4 billion in 2017. But the trend shows it
will increase throughout the next coming years.

Total Revenue
Overall, after plotting the figures of total Government Revenue over the period 2012-2016 we
can identify a trend as shown in the next page:

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 Total Revenue
800
750
694.5
700 671.6
620.2 648.7
£ BILLION

650
600
603.4
550
500
450
400
2012 2013 2014 2015 2016
YEAR

Figure 16: Graphical Plotting of figures of Total Government Revenues over the period 2012-2016

We can observe from the above graph, that the revenues of the government from different
sources shows an upward trend and has increased from £603.4 billion to £694.5 billion during
the period 2012-2016. Not only this, the trend is an upward sloping which signifies that the
revenues in the upcoming years are expected to be increasing.

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Sectors of Government Expenditure of UK
The major Government Expenditures of UK include Public Pensions, National Health Care,
State Education, Defense, Social Welfare, State Protection, Transport, General Government
Expenditures, Other Public Services, Public Sector Interests. The below table shows the
amount of expenditures in each sector over the period between 2012-2016:

Expenditures 2012 2013 2014 2015 2016 Average

(£ billion) (£ billion) (£ billion) (£ billion) (£ billion) (£ billion)
Public Pensions 129.6 139.2 143 149.8 154.7 143.26
National Health
121.3 124.3 129.4 134.1 138.5 129.52
Care
State Education 86.5 84 84.9 85.1 84.8 85.06
Defense 44.1 41.9 44 45.3 44.8 44.02
Social Welfare 118 117 113.7 114.1 113.6 115.28
State Protection 31.9 31.3 29.7 30.5 29.9 30.66
Transport 19.4 20.3 20.9 22 27.8 22.08
General
13.9 13.2 13.3 13.3 13.8 13.5
Government
Other Public
105.9 120 118 120.8 108.5 114.64
Services
Public Sector
50.3 49.5 49.3 46.1 45.9 48.22
Interest
Total Spending 720.9 740.7 746.2 761.1 762.3 746.24
Table 2: Sectors of Government Expenditure of UK during the period 2012-2016

Sectors of Government Expenditure in UK

180
160
140
120
£ BILLION

100
80
60
40
20
0
2012 2013 2014 2015 2016 Average
YEAR

Public Pensions National Health Care State Education Defence

Social Welfare State Protection Transport General Government
Other Public Services Public Sector Interest

Figure 17: Sectors of Government Expenditures of UK during the period 2012-2016

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The above composition can also be shown through a pie chart based on the average calculated
from the amount in between the period 2012-2016:

GOVERNMENT SPENDING SECTORS OF UK

Public Sector Interest
Other Public 7% Public Pensions
Services
19%
15%

General
Government
National Health
2%
Care
Transport
17%
3%
State
Protection
4%

Social Welfare
16% Defence State Education
6% 11%

Figure 18: Pie Chart representing Sectors of Government Expenditures of UK

Public Pensions
The state pension is a payment made from the government which could be obtained by local
residents after they reach the state pension age. The most a person can get is £122.30 per week
in UK. From the above table, we can plot the figures of public pension expenditure over the
period 2012-2016 and identify a trend as shown below:

Public Pensions
170
165
160
154.7
155 149.8
£ BILLION

150
143
145 139.2
140
135
130
125 129.6
120
2012 2013 2014 2015 2016
YEAR

Figure 19: Graphical Plotting of figures of Public Pensions over the period 2012-2016

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The graph above shows that from 2012 to 2016 the expenditure on public pensions by
government have been increasing and the trend illustrates an upward increasing slope. It
reached a high balance of £154.7 billion in 2016 and recorded a low balance of £129.6 billion
in 2012. The trend is an upward increasing trend so it can be expected or forecasted that the
figures would continue to increase in future according to the trend.

National Health Care

It is the expenditure on national healthcare where the healthcare is directed to all the residents
of UK free of costs. From the above table, we can plot the figures of national health care
expenditure over the period 2012-2016 and identify a trend as shown below:

National Health Care

150
145
138.5
140
134.1
£ BILLION

135
129.4
130
124.3
125
120 121.3
115
110
2012 2013 2014 2015 2016
YEAR

Figure 20: Graphical Plotting of figures of National Health Care over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on national health care by
government have been increasing and illustrates an upward increasing trend. It reached a high
balance of £138.5 billion in 2016 and recorded a low balance of £121.3 billion in 2012. The
trend is an upward increasing trend so it can be expected or forecasted that the figures would
continue to increase in future according to the trend.

State Education
State education is an expenditure by government on primary or secondary education offered to
all children without any charges.

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From the above table, we can plot the figures of state education expenditure over the period
2012-2016 and identify a trend as shown below:

State Education
87
86.5
86.5
86
85.5
£ BILLION

85.1
85 84.8

84.5 84.9
84
84
83.5
83
82.5
2012 2013 2014 2015 2016
YEAR

Figure 21: Graphical Plotting of figures of State Education over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on state education by
government have been fluctuating to some extent but mostly illustrates a downward decreasing
trend. It reached a high balance of £86.5 billion in 2012 and recorded a low balance just after
that year of £84 billion in 2013. The trend is downward decreasing trend mostly so it can be
expected or forecasted that the figures would continue to decrease in future according to the
trend.

Defense
It is an expenditure by government on military and law enforcements. From the above table,
we can plot the figures of defense expenditures over the period 2012-2016 and identify a trend
as shown in the next page:

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 Defense
47

46
45.3 44.8
45
44.1 44
£ BILLION

44

43
42
41.9
41
40
39
2012 2013 2014 2015 2016
YEAR
Figure 22: Graphical Plotting of figures of Defense over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on defense by government have
been fluctuating to some extent but mostly illustrate an upward increasing trend. It reached a
high balance of £45.3 billion in 2015 and recorded a low balance just after that year of £41.9
billion in 2013. The trend is upward increasing mostly so it can be expected or forecasted that
the figures would continue to decrease in future according to the trend.

Social Security/ Welfare

It is an expenditure by government on certain social security benefits including income support,
job seeker allowance and child benefits to UK residents.

From the above table, we can plot the figures of social welfare expenditure over the period
2012-2016 and identify a trend as shown in the next page:

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 Social Welfare
120
118
118 117

116
114.1
£ BILLION

113.6
114
113.7
112

110

108

106
2012 2013 2014 2015 2016
YEAR

Figure 23: Graphical Plotting of figures of Social Welfare over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on social welfare by
government have been decreasing gradually and illustrates a downward trend with some small
fluctuations. It reached a high balance of £118 billion in 2012 and recorded a low balance of
£113.6 billion in 2016. The trend is mostly a downward trend so it can be expected or forecasted
that the figures would continue to decrease in future according to the trend.

State Protection
Social Protection involves various benefits provided to local residents of UK by government
which can be either in cash or in kind including hospital stays, free school meals and home
care.

From the above table, we can plot the figures of state protection expenditure over the period
2012-2016 and identify a trend as shown in the next page:

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 State Protection
32.5
32 31.9
31.3
31.5
31 30.5
£ BILLION

30.5 29.9
30
29.5
29.7
29
28.5
28
27.5
27
2012 2013 2014 2015 2016
YEAR

Figure 24: Graphical Plotting of figures of State Protection over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on state protection by
government have been decreasing gradually and illustrates a downward trend with some small
fluctuations. It reached a high balance of £31.9 billion in 2012 and recorded a low balance of
£29.7 billion in 2014. The trend is mostly a downward trend so it can be expected or forecasted
that the figures would continue to decrease in future according to the trend.

Transport
It is the expenditure on British transport sector by UK government. From the above table, we
can plot the figures of transport expenditure over the period 2012-2016 and identify a trend as
shown below:

Transport
35

30 27.8
22
25 20.9
20.3
£ BILLION

20 19.4

15

10

0
2012 2013 2014 2015 2016
YEAR

Figure 25: Graphical Plotting of figures of Transport Expenditures over the period 2012-2016

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The graph above shows that from 2012 to 2016 the expenditure transport by government have
been increasing and illustrates an upward increasing trend. It reached a high balance of £27
billion in 2016 and recorded a low balance of £19.4 billion in 2012. The trend is an upward
increasing trend so it can be expected or forecasted that the figures would continue to increase
in future according to the trend.

General Government
It is an expenditure on general services, research and development general public services,
executive and legislative services, etc.

From the above table, we can plot the figures of general government expenditure over the
period 2012-2016 and identify a trend as shown below:

General Government
14
13.9
13.8
13.8

13.6
£ BILLION

13.4 13.3

13.2 13.3
13.2
13

12.8
2012 2013 2014 2015 2016
YEAR

Figure 26: Graphical Plotting of figures of General Government Expenditures over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on general services by
government have been fluctuating and illustrates a fluctuating trend with decreasing values. It
reached a high balance of £13.9 billion in 2012 and recorded a low balance of £13.2 billion in
2013. The trend is mostly fluctuating and a little downward sloping trend so it can be expected
or forecasted that the figures would continue to decrease in future according to the trend.

Other Public Services

Government expenditure on other public services include expenditures on economic and
commercial sectors, agriculture, forestry, fishing, waste management, housing and community
amenities, recreational and sporting service and others.

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From the above table, we can plot the figures of other public service expenditure over the period
2012-2016 and identify a trend as shown below:

Other Public Services

125
120.8
120
120 118

115
£ BILLION

110 108.5

105 105.9

100

95
2012 2013 2014 2015 2016
YEAR

Figure 27: Graphical Plotting of figures of Other Public Services over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure other public services by
government have been fluctuating and illustrates a fluctuating trend with mostly increasing
values. It reached a high balance of £120.8 billion in 2015 and recorded a low balance of
£105.9 billion in 20. The trend is mostly fluctuating and a little upward sloping trend so it can
be expected or forecasted that the figures would continue to increase more or less in future
according to the trend.

Public Sector Interest

It is the expenditure on public sector debt interest by the UK government. From the above table,
we can plot the figures of public sector interest expenditure over the period 2012-2016 and
identify a trend as shown in the next page:

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 Public Sector Interest
52
51 50.3
49.5
50 49.3
49
£ BILLION

48
47
46
46.1
45 45.9
44
43
42
2012 2013 2014 2015 2016
YEAR

Figure 28: Graphical Plotting of figures of Public Sector Debt Interest over the period 2012-2016

The graph above shows that from 2012 to 2016 the expenditure on public sector debt interest
by government have been decreasing gradually and illustrates a downward trend with
decreasing slopes. It reached a high balance of £50.3 billion in 2012 and recorded a low balance
of £45.9 billion in 2016. The trend is a downward decreasing trend so it can be expected or
forecasted that the figures would continue to decrease in future according to the trend.

Total Spending
Overall, after plotting the figures of total Government Revenue over the period 2012-2016 we
can identify a trend as shown below:

Total Spending
800
790
780
762.3
770 761.1
£ BILLION

760
746.2
750 740.7
740
730
720
710 720.9

700
2012 2013 2014 2015 2016
YEAR

Figure 29: Graphical Plotting of figures of Total Government Spending over the period 2012-2016

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We can observe from the above graph, that the total expenditures made by the government on
different sectors show an upward trend and has increased from £720.9 billion to £762.3 billion
during the period 2012-2016. Not only this, the trend is an upward sloping which signifies that
the government expenditure in the upcoming years are expected to be increasing.

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Budget Deficit & Public-Sector Net Cash
Requirement
Overall, after plotting the figures of total budget deficit over the period 2012-2016 we identify
a trend as shown below:

Budget Deficit
0
2012 2013 2014 2015 2016
-20

-40
£ BILLION

-60 -67.8
-89.5
-80 -97.5

-100
-117.5
-120
-120.5
-140
YEAR

Figure 30: Graphical Plotting of figures of Budget Deficit over the period 2012-2016

We can observe from the above graph, that the Budget Deficit of UK shows a declining trend
from -117.5 billion to -67.8 billion during the period 2012-2016 but only recorded one
increasing figure of -120.5 billion in 2013. Not only this, the trend is a declining trend which
signifies that the budget deficit in the upcoming years are expected to be decreasing.

As we can observe that the Budget Deficit of UK government had been decreasing, therefore
it can be expected that the public-sector net cash requirement is likely to decrease in future.

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Suggestion & Conclusion
After analysing all the trend of government revenues and expenditures, it can be concluded that
the total government revenues and expenditures have overall increased during the period from
2012 to 2016. It is also noticeable that the budget deficit for UK government has decreased
significantly during this period which signifies that government’s revenues have been
increasing more than the increase of government expenditures. It is quite clear that government
of UK is enforcing expansionary fiscal policy. It could also be said that the trends suggest that
the overall government revenues and expenditures of are likely to increase in future and causing
the budget deficit to decrease further in future.

Moreover, the forecasting performed based on the trend analysis might not be accurate because
of the inherent uncertainties and the issue of Brexit. Therefore, the actual values or trend after
the Brexit can be quite different from the predictions.

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Annexure: References
Allen, K. (2017, June 08). the gurdian . Retrieved from
https://www.theguardian.com/business/2017/jun/08/uk-economy-falls-to-bottom-of-eu-
growth-league

City A.M>. (2017, June 05). Retrieved from http://www.cityam.com/265954/world-bank-

upgrades-uk-economic-growth-forecast-against

En.wikipedia.org. (2017). Brexit. [online] Available at: https://en.wikipedia.org/wiki/Brexit

[Accessed 19 Aug. 2017].

Office for National Statistics . (n.d.). Retrieved from https://www.ons.gov.uk/

Office for National Statistics. (2017, July). Retrieved from https://www.ons.gov.uk/economy

Tradingeconomics.com. (2017). United Kingdom Corporate Tax Rate | 1981-2017 | Data |

Chart | Calendar. [online] Available at: https://tradingeconomics.com/united-
kingdom/corporate-tax-rate [Accessed 19 Aug. 2017].

Tradingeconomics.com. (2017). United Kingdom Personal Income Tax Rate | 1995-2017 | Data
| Chart. [online] Available at: https://tradingeconomics.com/united-kingdom/personal-income-
tax-rate [Accessed 19 Aug. 2017].

Tradingeconomics.com. (2017). United Kingdom Sales Tax Rate | VAT | 1977-2017 | Data |
Chart | Calendar. [online] Available at: https://tradingeconomics.com/united-kingdom/sales-
tax-rate [Accessed 19 Aug. 2017].

Tradingeconomics.com. (2017). United Kingdom Social Security Rate | 1981-2017 | Data.

[online] Available at: https://tradingeconomics.com/united-kingdom/social-security-rate
[Accessed 19 Aug. 2017].

Tradingeconomics.com. (2017). United Kingdom Social Security Rate For Companies | 1981-
2017 | Data. [online] Available at: https://tradingeconomics.com/united-kingdom/social-
security-rate-for-companies [Accessed 19 Aug. 2017].

Tradingeconomics.com. (2017). United Kingdom Social Security Rate For Employees | 1981-
2017 | Data. [online] Available at: https://tradingeconomics.com/united-kingdom/social-
security-rate-for-employees [Accessed 19 Aug. 2017].

Ukpublicrevenue.co.uk. (2017). UK Public Revenue - Numbers Charts Analysis History.

[online] Available at: http://www.ukpublicrevenue.co.uk/ [Accessed 19 Aug. 2017].

Ukpublicspending.co.uk. (2017). UK Public Spending - Numbers Charts Analysis History.

[online] Available at: http://www.ukpublicspending.co.uk/ [Accessed 19 Aug. 2017].

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Wikipedia. (n.d.). About Us: Economy of the United Kingdom. Retrieved from
https://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

Wikipedia. (n.d.). Retrieved from https://en.wikipedia.org/wiki/United_Kingdom

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