IFS Zooms In: The Economy How could the Chancellor cut spending?
Nov 20, 2025
Ben Zaranko and Tom Waters from the Institute for Fiscal Studies dive into the complexities of public spending and potential cuts. They highlight how the £1.3 trillion budget is allocated, detailing pressures from an ageing population and health care costs. The duo discusses strategies for reducing welfare spending, including altering the Universal Credit system. They explore the trade-offs between cutting costs and maintaining service quality, revealing the political challenges that accompany any significant changes. Tune in for insightful takes on the future of public finances!
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Scale And Composition Of Government Spending
- The UK government will spend about £1.3 trillion this year, roughly 44% of GDP and £19,000 per person.
- Major slices include welfare (
25%), public services (45%), investment, and around 8% on debt interest.
State Size Has Recently Rebounded
- The size of the state rose recently and is about five percentage points of GDP higher than five years ago.
- Increases reflect debt interest, healthcare and broadly higher spending across departments.
Welfare Split: Pensioners Vs Working Age
- Working-age welfare is about £140bn and pensioner spending about £175bn, with health-related benefits rising fastest.
- Non-health working-age benefits fell over the 2010s, offsetting some growth until recently.