Belfast Telegraph

Wednesday 24 September 2014

Resistance to cuts 'may deafen PM'

David Cameron and Chancellor George Osborne may yet be forced to scale down the pace of spending cuts, according to one expert

David Cameron and George Osborne may be forced to pull back from the pace and scale of their public spending cuts if public opposition becomes "too loud" to ignore, according to the head of the Institute for Fiscal Studies.

Writing in Prospect magazine, Paul Johnson insisted the pain from the recession will be felt throughout society and that, even if any recovery progressed, real incomes will still fall.

Pointing to the U-turn on sentencing, abandoning a policy meant to save £130 million, the think-tank director cast doubt on the resolve of the Prime Minister and Chancellor to implement their huge cuts package.

"We have already seen the Prime Minister baulking at the consequences of cuts in his recent rethink on reduced jail terms for certain criminals," Mr Johnson wrote.

"As he will no doubt know, in politics the majority counts, and the clamour for higher spending to help through the hard times may, in time, become too loud for him and his Chancellor to ignore."

Mr Johnson said any downgrade in the growth forecasts of the Office for Budget Responsibility is "likely" to force Mr Osborne to delay his plans to eliminate the structural deficit.

A return to recession, or a major downgrade in growth expectations, "might well need a macroeconomic plan B".

"Even assuming the recovery progresses as expected, it will not be a feelgood recovery. And this brings political risk. With relatively high inflation, real earnings are set to fall. Tax rises have already hit people's pockets, and benefit cuts have only just begun.

"Estimates by Institute for Fiscal Studies' researchers suggest that real incomes will on average be no higher in 2013 than they were in 2004."

Mr Johnson claimed: "Unlike previous recessions the pain from this one will be shared across society, in contrast to that of the early 1980s in which millions became unemployed while others prospered."

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