Putting aside the rhetoric, both parties want to reduce the deficit, and I think we could all agree that it is for the benefit of the country to do so.

The real question is, will this budget achieve this? It's too easy to simply say cuts = lower deficit, it doesn't work like that and it never did and the conservatives were close to lying through their teeth (perhaps I should say, were being misleading) when they implied as much during the election campaign.

In the simplistic way in which I understand economics, to lower the deficit the government's income needs to be higher than it's expenditure. Simple as that.

Does this necessarily mean small government? No. Despite the Chancellors extensive use of the word necessary, this deficit is also being used as an excuse to reduce the size of government, a philosophy which the majority in this country do not support (hence the need for an excuse, with no mandate from the people).

A completely separate question is: will these enormous cuts work? They might do, but I'm not sure.

I really do only have a basic understanding of economics, but here's the situation as I understand it:

It is impossible to do reduce a government deficit without taking money out of the UK economy (unless the organisations to whom the government owes money are British, could anyone enlighten me on this?). The question is where to remove this money from, do you remove it from the income and wealth of the entire population, or do you remove it specifically from the public sector?



The extreme left (or should I say right) of this graph would clearly be a disaster. Have the conservative government got the balance right? At this point I'm lost, and the debate essentially becomes a debate between economists, but I can't say I'm overjoyed at the dangers present in this budget.

This is just my understanding of the situation, I don't pretend to be an authority on economics, and if I need putting straight in any way, fire away.

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Meh arguing over semantics the lot of ye, who care's about Marx or Maggie.

What 's being cut my friends how much is be added to petrol, drink or the fags, thats what is important to the man in street is his pension to be cut or VAT to increase not who spends more or if marx is wrong.

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Myrddraal,

It looks like you're taking a private sector approach.

Cutting government budgets doesn't automatically mean layoffs like in the private sector. It is possible to cut the budget without affecting unemployment. However, while it is possible it is not probable.

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yes, because a level of governement spending over and above 40% of GDP has been shown to depress long term growth, which given our declining demographics is a sure way to make life miserable for future generations. having massive deficit spending also greatly increases the amount of debt interest a country has to pay, money that could be spent on services, an example of which is that by 2011 the british government will be spending nearly twice as much on repaying debt interest as it does on the defence budget.

i remain utterly and totally unconvinced that there is a majority in favour of keeping government spending as high as it is now, and if spending must be lowered then so must government ambitions.

government spending at best recycles money around the economy, and excessive spending has been shown to depress growth, so while the economy may take a short term growth hit while the private sector moves to occupy the space vacated by the public sector it will in the long term boost growth, and boost trade competitiveness by reducing the tax burden on british companies.

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I think it was overall a good budget, things like pensions will rise when they should (and they REALLY should) while other benefits, which have risen unrestricted will be cut and then capped. Capital Gains tax will rise, allowing more money to be clawed back from non-wage earners while the pain will be mitigated somewhat by cutting corporation tax.

We have to recognise that right now oil and banking make us money, and have done since Thatcher closed the massively inefficient and wasteful state-subsidised industries that wer, frankly, pathetic by modern standards. We must remember that the reason why we have no car manufacturers, motorbike manufacturers, or shipbuilders is because of state ineffiency, where innovation was quashed and these industries were used as a sort of feel-good form of subsidised working.

What no needs to happen is that industry and other forms of wealth generation are created and bedded in outside the South East, and the budget helps to encourage this as well.

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I'm drunk.

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interesting article on just how savage these cuts really are:

http://www.telegraph.co.uk/finance/c...that-deep.html

not that savage really.

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Although public sector job losses does decrease the tax revenue, seeing as the WHOLE salary was from taxes this is proportionally a saving.

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nope......................... still seeing nothing that would support the contention that people do not believe government is bloated and are happy with it the size it is:

http://www.telegraph.co.uk/news/news...e-Osborne.html

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