According to the Bank of England, the UK's marginal propensity to consume is estimated to be 0.64 - Edexcel - A-Level Economics A - Question 1 - 2022 - Paper 2

To calculate the total reduction in GDP, we need to use the multiplier formula:

$Multiplier = \frac{1}{1 - MPC}$

Given that the marginal propensity to consume (MPC) is 0.64, we can substitute this value into the formula:

$Multiplier = \frac{1}{1 - 0.64} = \frac{1}{0.36} \approx 2.78$

Now, to find the total impact on GDP from the £20 million reduction in government spending, we multiply the government spending decrease by the multiplier:

$Total Reduction = Multiplier \times \\text{Change in Government Spending}$ $Total Reduction = 2.78 \times £20m \approx £55.6m$

Thus, the total reduction in the UK's GDP from a fall in government spending of £20 million is approximately £55.6 million.