With Budget Deficit Lower Than Expected, Are Huge Cuts In Public Spending Really Needed?

Previous forecasts for economic growth over the next few years have been revised down, according to the new Office For Budget Responsibility.

Whichever view one takes of the course of economic recovery in the UK, the Treasury will have to find £70bn to plug the huge hole that has been left by the current deficit.

However, the predicted economic growth is still expected to be above long-term average and slightly more than City experts had suggested.

Not only that, the overall deficit, it is now believed, will be actually smaller than originally feared over the next few years, contrary to the dire predictions hammered home by the new Coalition government, as they loudly proclaim the need for huge cuts in public spending to bring the deficit down.

The Deputy Prime Minister Nick Clegg stood up today and insisted that immediate and deep reductions in spending were vital this year to save the UK economy.

But are such draconian measures really needed right now, if at all?

The Chancellor, George Osborne, will no doubt argue, that the structural deficit - the deficit not related to growth - is worse than predicted. However, this is only by 0.3%; hardly much - and amounts to only about £3bn of GDP.

And more significantly, since Labour's last Budget in March, the public purse has actually turned out to be £8bn healthier.

The TUC's General Secretary, Brendan Barber, said today that with the overall deficit being less than expected, the cuts in spending proposed by the Coalition were not necessary and risked taking Britain back into recession.

In my view the government is grossly exaggerating poor state of the economic climate they have inherited to score political points and will ultimately make an already-precarious situation even worse than it is now.