Public finances

Shape shifting: the changing role of the state during fiscal consolidation

Matthew Whittaker
Matthew Whittaker
Adam Corlett
Adam Corlett
David Finch
David Finch

Resolution Foundation’s latest analysis looks at the changing size and shape of the state and what decisions the government will need to make going forward.

Key findings

  • Underpinned by an assessment that it must both deliver a surplus in order to reduce debt and do so via spending cuts, the government is set to reduce the size of the state towards historic lows
  • Subjective choices about the split between DEL and AME, consumption and investment and different services and groups fundamentally alter the shape of the state over time
  • In particular, the nature of the post-crisis consolidation – allied with demographic changes – is serving to increase the share of overall spending on older people and health while reducing the share going to working-age families and economic growth
  • This may or may not be the right balance to strike, but there is a danger that we fail to check in on these developments until after they occur – what do we want the state to do?

Further reading

See it. Say it. Sort it.
How to reset Britain’s economic policy
·
Matthew Cavanagh, Alex Clegg, Ruth Curtice, James Smith
The Macroeconomic Policy Outlook Q2 2026
·
Simon Pittaway, James Smith, Greg Thwaites
Understatement of the year
Putting the 2026 Spring Forecast in context
·
Hannah Aldridge, Mike Brewer, Elliott Christensen, Tom Clark, Alex Clegg, Nye Cominetti, Ruth Curtice, Julia Diniz, Sophie Hale, Lindsay Judge, Zachary Leather, Jonathan Marshall, Charlie McCurdy, Louise Murphy, Simon Pittaway, Cillian Sheehan, Hannah Slaughter, James Smith, Imogen Stone, Jamie Titus-Glover, Lalitha Try
Matthew Whittaker
Matthew Whittaker
Adam Corlett
Adam Corlett Principal Economist
David Finch
David Finch