Last week the Chancellor made an important speech. In it he charted the progress in cutting the deficit so far, and set out why more needs to be done to complete the task .
He proposed that an additional £25 billion a year be taken from the projected growth in cash public spending in the first two years of the next Parliament, establishing a lower base in 2016-17 for future growth in spending than current plans.
In 2012-13 total spending was £679.3bn. In 2014-15 this will be £730.5bn. Previous plans saw this rising to ££756.3bn in 2016-17. The revised plans will see it effectively frozen for 2 years , at £731.3bn in 2016-17, before going up by £9.3bn the following year.
As tax revenues are forecast to rise from £556bn in 2012-13 to £699.6bn by 2017-18, this will bring the deficit in that year down to £40.9bn. The Treasury using previous plans scores this as 80% of the work being done by spending measures. The deficit comes down because spending goes up more slowly than revenue.
In his speech on the EU yesterday the Chancellor reminded the rest of the EU that The European economies are falling behind the Asian ones. He drew attention to the high unemployment in many parts of the continent, the lack of competitiveness and the need for more jobs friendly policies. He also made clear that the UK as a non Euro member with no intention of joining the single currency needs a new relationship so that we do not get dragged into accepting liabilities and instructions appropriate for a single currency zone but not for us.