October 17, 2010 8:29 pm

The reality of cuts

With the UK coalition government about to embark on the first sustained reduction in spending for 50 years, this analysis looks at the rise in spending, what cuts are planned and what the likely effects will be

Britain’s public sector has enjoyed a decade of plenty. Insulated from the global recession, it is still living off budgets set in 2007 when good times reigned and the public finances appeared set fair. But the party ends next April when four years of deep cuts start to bite.

In a bid to balance the books, George Osborne will announce on Wednesday where the axe will fall.

The effects will be felt most by the poor and more in low income areas. But the chancellor hopes the economy – and government – will ride out the storm.

Below is the sort of briefing Mr Osborne will have received, annotated with political strategy from advisers.

Data sources: HMT; IFS, FT analysis; ONS; Landman Economics; PwC ‘Sectoral and regional impact of the fiscal squeeze’ (Oct 2010)

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