section_path: Government spending and economic management
section_name: Government spending and economic management
paragraph_text: Government spending and economic management
  
  Government involvement in the economy is primarily exercised by HM Treasury, headed by the Chancellor of the Exchequer. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.
  
  In the 20-year period from 1986/87 to 2006/07 government spending in the UK averaged around 40% of GDP. In July 2007, the UK had government debt at 35.5% of GDP. As a result of the 2008 financial crisis and the Great Recession, government spending increased to a historically high level of 48% of GDP in 2009–10, partly as a result of the cost of a series of bank bailouts. In terms of net government debt as a percentage of GDP, at the end of June 2014 public sector net debt excluding financial sector interventions was £1304.6 billion, equivalent to 77.3% of GDP. For the financial year of 2013–2014 public sector net borrowing was £93.7 billion. This was £13.0 billion higher than in the financial year of 2012–2013.
  
  Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax, and, increasingly, fees and charges such as those from on-street parking. Central government revenues are mainly from income tax, national insurance contributions, value added tax, corporation tax and fuel duty.
  
  Government involvement in the economy is primarily exercised by HM Treasury, headed by the Chancellor of the Exchequer. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.
  
  In the 20-year period from 1986/87 to 2006/07 government spending in the UK averaged around 40% of GDP. In July 2007, the UK had government debt at 35.5% of GDP. As a result of the 2008 financial crisis and the Great Recession, government spending increased to a historically high level of 48% of GDP in 2009–10, partly as a result of the cost of a series of bank bailouts. In terms of net government debt as a percentage of GDP, at the end of June 2014 public sector net debt excluding financial sector interventions was £1304.6 billion, equivalent to 77.3% of GDP. For the financial year of 2013–2014 public sector net borrowing was £93.7 billion. This was £13.0 billion higher than in the financial year of 2012–2013.
  
  Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax, and, increasingly, fees and charges such as those from on-street parking. Central government revenues are mainly from income tax, national insurance contributions, value added tax, corporation tax and fuel duty.
  
  Government involvement in the economy is primarily exercised by HM Treasury, headed by the Chancellor of the Exchequer. In recent years, the UK economy has been managed in accordance with principles of market liberalisation and low taxation and regulation. Since 1997, the Bank of England's Monetary Policy Committee, headed by the Governor of the Bank of England, has been responsible for setting interest rates at the level necessary to achieve the overall inflation target for the economy that is set by the Chancellor each year. The Scottish Government, subject to the approval of the Scottish Parliament, has the power to vary the basic rate of income tax payable in Scotland by plus or minus 3 pence in the pound, though this power has not yet been exercised.
  
  In the 20-year period from 1986/87 to 2006/07 government spending in the UK averaged around 40% of GDP. In July 2007, the UK had government debt at 35.5% of GDP. As a result of the 2008 financial crisis and the Great Recession, government spending increased to a historically high level of 48% of GDP in 2009–10, partly as a result of the cost of a series of bank bailouts. In terms of net government debt as a percentage of GDP, at the end of June 2014 public sector net debt excluding financial sector interventions was £1304.6 billion, equivalent to 77.3% of GDP. For the financial year of 2013–2014 public sector net borrowing was £93.7 billion. This was £13.0 billion higher than in the financial year of 2012–2013.
  
  Taxation in the United Kingdom may involve payments to at least two different levels of government: local government and central government (HM Revenue & Customs). Local government is financed by grants from central government funds, business rates, council tax, and, increasingly, fees and charges such as those from on-street parking. Central government revenues are mainly from income tax, national insurance contributions, value added tax, corporation tax and fuel duty.