Government Involvement
Government involvement throughout the economy is exercised by the Chancellor of the Exchequer who heads HM Treasury. 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. As a result of the 2007–2010 financial crisis and the late-2000s global 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 July 2007, the UK had government debt at 35.5% of GDP. This figure rose to 56.8% of GDP by July 2009. As of June 2010 there were approximately 6,051,000 public sector employees in the UK (compared to approximately 23,107,000 private sector employees).
Read more about this topic: Economy Of The United Kingdom
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