If Osborne makes £30bn cuts as promised, he can’t achieve his deficit reduction targets

May 11, 2015

Osborne is now mooting an emergency budget within the next few weeks to lay the foundations for the £30bn fiscal consolidation (aka cuts) to be announced in the autumn spending review.   It is made up of £12bn welfare cuts, £13bn reductions in departmental expenditure (aka cuts in public services), and £5bn in tax avoidance measures.  What is not immediately apparent is that, if the NHS, schools and overseas aid budgets continue to be ring-fenced, the cutbacks in unprotected and sensitive expenditure like defence and the police will have to be as high as 18%.

The cuts will be at least as large as in the last parliament, though much harder to implement after more obvious cuts have been made, and would bring the cuts to a full third in Whitehall budgets between 2010 and 2020.   The Tories will loftily dismiss these difficulties as ‘efficiency savings’, though if that were true they would have been made long before now.   So it’s not just that large parts of the ‘Tory programme are uncosted, it’s rather that they will be extremely difficult to implement – indeed so hard that if they were implemented, they would slow down the economy so much that Osborne’s deficit reduction targets will move out of reach.   This will produce an extraordinary paradox.

The amount of pain, anguish and impoverishment that will be enforced by this latest round of even bigger cuts will  actually achieve little or no reduction in the deficit which is supposed to be the whole objective of the exercise.   The deficit is still a whopping £92bn and didn’t reduce at all in this last year because as incomes shrunk, tax receipts were squeezed as well.   If now these £30bn cuts are imposed on top of a fast deflating economy in which the growth rate halved in the last quarter to a mere 0.3%, the economy will again grind slowly but steadily to a halt.   This is exactly what happened in 2012, which caused Osborne to ease up on austerity in order to kickstart a modicum of growth again, but at the expense of abandoning his promise to eliminate the structural deficit by 2015.

Michael Meacher

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10 Responses to “If Osborne makes £30bn cuts as promised, he can’t achieve his deficit reduction targets”

  1. Gordon says:

    The Cost of Cameron, By Eoin Clarke by Eoin Clarke
    http://www.greenbenchesuk.com/2013/12/the-cost-of-cameron-100-worst-failures.html

    The 100 worst failures of David Cameron’s Government. #LestWeForget.
    http://www.greenbenchesuk.com/2013/10/list-100-failures-by-david-camerons.html

  2. sovereigntea says:

    As usual only mention of the “deficit” and not the ever expanding national debt which continues to escalate under the Tories as it did under the Blair regime hardly surprising as the Murdoch backed bad actors are one and the same. Osbourne like an Essex girl with an unlimited credit card on a shopping spree has continued to rack up the national debt to the benefit of his bankster chums and the enslavement of the UK with interest bearing debt. Every week you go to work for over one whole day just to supply your government overseers with VAT and get little in return … that is slavery ! http://www.ukpublicspending.co.uk/debt_history

    Deficit
    AAA |
    DEFINITION of ‘Deficit’

    The amount by which expenses exceed income or costs outstrip revenues. Deficit essentially refers to the difference between cash inflows and outflows. It is generally prefixed by another term to refer to a specific situation – trade deficit or budget deficit, for example. Deficit is the opposite of “surplus” and is synonymous with shortfall or loss.
    INVESTOPEDIA EXPLAINS ‘Deficit’

    For example, if a nation has exports of $2 billion and imports of $3 billion in a given year, it would have a trade deficit of $1 billion for that year. Similarly, a government that has revenues of $10 billion and expenditures of $12 billion in a particular year would have a budget deficit of $2 billion in that period.

    #investopedia.com#

  3. G0dAlmighty says:

    Osbourne. George Osbourne.

    Reminds me of that story. The Emperor Has No Clothes.

    Has any financial journo actually done their job and asked him where money comes from in these dark times? No of course not. That would show the Emperor has no clothes.

    Hookers and cocaine too. Bullingdon old chap what what.

    Traitors one and all.

    Austerity is plain evil. The Greeks seem to know this. Folk here still seem to accept the media continually telling them otherwise. Traitors as well.

    Forgive them for they know not what they do. Doesn’t apply to these criminals. They know full well. Evil. Just evil.

  4. G0dAlmighty says:

    Osborne* (please forgive my bad spelling).

  5. Lynn says:

    Its as made up as they are….Not one MP dare speak out about the federal reserve and the robber barrons. I wasnt educated at Eton but even I know we are being robbed blind.

    • Aldous says:

      You’re not equipped for Eton Lynn. Boys(sic) only I’m afraid, girls need not apply.
      By ‘equipped’ I don’t mean IQ but in the nether and other relevant regions that make women so mysteriously unique from men.
      I was virtually brought up by my beautiful Aunt after my Mum died young and my Dad – a war wounded – never got over it. I shared their house with her three younger daughters and she treated me exactly the same as them by walking around the landing stark naked at times. Her hubby/my Uncle had been torpedoed twice in the Atlantic Convoys and survived to become a second father to me. He never had a bad word for the Germans and my own Dad only ever spoke of them in the highest regard , often referring to when the Red Cross ship he was in was ‘pulled over’ by the Germans for inspection and that they were ‘perfect gentlemen’.

      Anyway, I hasten to add that I use ‘boys’ in its loosest possible sense when referring to the likes of Osborne and Cameron etc. I believe Osborne was Cameron’s ‘fag’ at Eton? These in-between male and female Etonian types have a distinct look, feel and sound about them don’t you think? I can never imagine any of them on the job with a real woman. It’s an oxymoron. There will have been more passion at Eton Dormitories Inc than in any marital bed.

      Allegedly in Eton, there is a sign which states: “Cabinet Makers To The Queen”. and we’re not talking furniture.

  6. Lynn says:

    You are right Aldous …Nancy boys all stick together. These idiots are no better than the Jeremy Kyle bunch. Based on their lifestyles and what drugs eventually do to you. Only a matter of time now as the whole farce unravels. They have relied on secrecy and propaganda for too long, it has finally caught up with them. Watch em run. Cowards the lot of them.

  7. Cobalt says:

    A ‘cut’ made by any government is just an agreement made by the government of that nation controlled by the banking elite (Rothschilds, Rockefellars, etc. etc.).

    The controlled government of that nation can then brag they’ve made a ‘cut’ (mostly through the banking elite controlled mainstream-media).

    Hence:

    – The government is happy
    – The populace is happy
    – The elite control-masters that control the government/populace are happy too. Slightly less profits for the banking elite – but everyone is happy.

    This has been going on since the dawn of time when ‘money’ became a never-ending unpayable debt by society. The pyramid control structure is right there in your face too.

    Regards,
    – Cobalt

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