Public spending as a proportion of GDP fell in 2016/17 to its lowest level for nearly a decade, new figures show.
Total Government expenditure in the 12 months to March 2017 is estimated to be equivalent to 39.4% of the size of the whole UK economy.
It is the first time the figure has dropped below 40% since 2007/08.
It is also the seventh successive annual fall since spending peaked at 45.3% of GDP in 2009/10 in the aftermath of the financial crash.
The figures were contained in the Treasury’s initial estimates for public spending in 2016/17.
Measuring public spending as a percentage of GDP (gross domestic product) helps to show the scale of Government expenditure in relation to the total value of the UK economy.
While the amount of spending in real terms rose from £769 billion in 2015/16 to £770.6 billion in 2016/17, this represented a fall in spending relative to GDP from 40% to 39.4%. The figure is still higher than pre-crash levels.
Public spending, when adjusted for inflation, hit a 40-year low of 34% of GDP in 1999/2000.
In subsequent years the figure began to rise, eventually hitting 39% in 2007/08.
The Treasury’s analysis reveals that since 1976/77, the amount of spending has fallen in real terms year-on-year on only seven occasions – three of which have been in this decade (2011/12, 2013/14 and 2015/16).
The other drops were recorded in 1977/78, 1985/86, 1988/89 and 1996/97.
Total expenditure is forecast to rise in real terms from £770.6 billion in 2016/17 to £789.6 billion in 2017/18 and £791.7 billion in 2018/19, before falling back to £789 billion in 2019/20.
Meanwhile, spending as a proportion of GDP is projected to have fallen to 38.2% by the end of the decade – the lowest level since 2003/04.