Far from being a drain on our economy, every £1 invested in public healthcare increases GDP by more than £3 according to the latest research. Most sensible people agree that investment in education and in health contribute to economic growth in the long term by creating a healthier, better educated, and therefore more productive labour force. A recent study however, found that government spending on healthcare is also an important short term stimulus to the economy. This perhaps surprising finding is due to the new employment opportunities and increased incomes that flow from the government spending, which in turn, result in positive cycles of consumption and employment growth.
The often promoted argument that increased government spending automatically leads to increased interest rates and crowds out the private sector just does not stand up to the facts. It suits the aims of some to paint all government spending as an 'unbearable burden on the country', a 'dead-weight on the tax payer'. In fact, it is clear from the research that some categories of government spending, including health, can have a very positive impact on the economy, (a so called positive fiscal multiplier effect). Anyone in favour of capping or reducing Government spending on health and education is flying in the face of the facts given this evidence - particularly during a recession.