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?

Lots of government cuts & No tax rises ↔↔↔↔↔↔↔ ↔↔↔↔↔↔↔↔↔ No government cuts & Tax hikes
Vast amounts of unemployment is created in a very short space of time. Tax revenues plummet, and not only is the economy in ruins, but the deficit actually increases.

Money is removed from the economy in one focussed area: the public sector. Public sector jobs and services disappear.		 In the short term the government succeeds in balancing the books, but the high burden on individuals and companies leads to a poorer population, and such a tactic will only last till the next general election.

Money is removed from the economy across the board. No individual sector is hit hard, but all suffer.


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.