Ryan Bourne is Head of Economic Research at the Centre for Policy Studies. Follow him on Twitter here.
The Chancellor today confirmed that government spending in 2015/16 will be £745 billion. According to the revenue projections of Budget 2013, this would leave us still with a deficit that year of around £90 billion, compared with the expected £20 billion for that year forecast way back in 2010.
It’s in this context that today’s Spending Review should be seen. There is plenty of work still to do in closing the deficit. And it’s important to state what today actually was. Today the Chancellor was setting out the composition of the £11.5 billion package of savings from departmental spending, necessary in 2015/16 to meet the existing expenditure plans. It was not announcing new, unplanned cuts. It was simply announcing where spending was allocated within the existing envelope. In other words, it is merely part of the fiscal consolidation programme which is now in the correct stage of trying to cut current expenditure– thought by economists to be a drag on medium-term growth.