GRANT EQUIVALENT EXPENDITURE ON INDUSTRIAL SUBSIDIES IN THE POST-WAR UNITED KINGDOM

ABSTRACT The paper constructs a consistent series for UK central government expenditure on industrial subsidies over the post-war period, valuing incentives in grant equivalent terms from the position of a firm undertaking investment appraisal. The analysis includes direct subsidy payments, as well as tax allowances, and provides a disaggregation between those subsidies available on a national, regional and sectoral or firm specific basis. A time-series analysis of the assembled data shows important differences between these components, with regional assistance performing a long-run distributive role, while other elements perform a stabilisation function. The short-run patterns are broadly constant across governments, but the long-run relationships exhibit structural breaks related to both political and economic events.