The document discusses the state of the UK public finances and economy. It notes that while the financial system has stabilized, risks and uncertainties remain. Growth is expected to continue but on a choppy, uneven path as a result of headwinds like fiscal tightening and consumer weakness balanced against tailwinds such as strong corporations and momentum from financial repair. The UK government aims to eliminate the structural deficit by 2015 through deep departmental budget cuts and welfare reforms despite total public spending remaining above 40% of GDP. Outsourcing and social enterprises are discussed as potential ways to lower costs while maintaining quality of public services.

1. Fixing the Public Finances 2011 Bill Hall Partner – Public Sector

2. The Economy : How this cycle could pan out Boom 20% Doom 10% New normal Peak Trough Peak Trough Recession Expansion Debt machine restarts Double dip or worse Economics & Markets, Deloitte Research, London

3. The Economy : Growth Headwinds & Tailwinds Economics & Markets, Deloitte Research, London Headwinds Tailwinds Fiscal tightening Debt Weak consumers Uncertainty Low interest rates/QE2 Financial repair Strong corporates Momentum

4. The Economy : Key indicators The Deloitte Academy percent Source: HM Treasury

5. The Economy : Comparison to Others Economics & Markets, Deloitte Research, London Fiscal deficit for 2010 (% GDP) UK

6. The Economist house price indicators: % under(-)/over(+) valued against long-run average of price-to-rents ratio The Economy : Debt headwind Economics & Markets, Deloitte Research, London UK

7. The Economy : UK CFO Survey: availability and price of corporate credit Cost of credit Availability of credit Economics & Markets, Deloitte Research, London

10. Public Finances: Expenditure and Income Footer Source: Guardian Income = c£577bn

11. Public Finance: Tax and spend since 1980

12. Public Finances: The fiscal deficit

16. Public Finances : Government as a customer Government spending in 3 groups: AME cash payouts, pay, and spend on third parties. £243 billion worth of goods and services purchased annually. Deloitte thinks this may reach £300bn by 2013-14. Over £1 in every £3 spent by government is in the private sector. We think this could be up to 44 per cent by 2013-14 Represents 6 per cent of GDP and employs 1.2m people.

20. Member of Deloitte Touche Tohmatsu