Comprehensive Spending Review – essential medicine
So the initial details of the Comprehensive Spending Review have been unveiled by George Osborne. Whilst they represent massive public sector cuts (totalling £83billion) I guess they are in line with what the country was expecting. The fact that the FTSE 100 was up on the day and that the labour party and trade unions are reacting angrily confirms this.
Brave steps did need to be taken to deal with the country’s massive over-leverage and the pill has to be swallowed at some point in time. The level of cuts do undoubtedly increase the risk of a double-dip recession or a slower recovery but this must be a better outcome than burying our heads in the sand and assuming we can continue to spend (and borrow) our way out of the current situation.
I have to say that I have particularly enjoyed the fact that the need for action has generated real debate about the role of the public sector in our economy.
The devil will undoubtedly be in the detail and hopefully the challenging budgetary targets being imposed will generate a bottom up approach to budgeting across the public sector to minimise the impact of these cuts on key front line services.