This is a very useful article in Economic Review from Deloitte well illustrated with charts and graphs to show:
- The fiscal situation
“We do not intend to spend too much time here on the fiscal position itself. Suffice it to say that the UK’s public finances are in their worst shape for over half a century.” - How big a squeeze?
Not sure that the Chancellor knows the answer! - What type of squeeze?
Options are tax rises or spending cuts – seems that the answer is the latter. - Direct economic effects
“This is a tricky issue involving some potentially awkward concepts. For a start, there is a distinction to be made between the direct effects of lower public spending on measured GDP growth, and the knock-on or ‘multiplier’ effects on other forms of activity throughout the economy.” - Labour market effects
You really don’t want to think about this one – but you’ll have to and it is not a pretty picture. - Other “multiplier” effects
“Neither are public sector workers likely to be the only ones to suffer. After all, the public spending boom of the last decade has boosted activity and employment in all sorts of private companies who supply goods and services to the public sector or are closely connected to it in other ways.”
I do not want to read any more – I am well depressed by now. - Who will suffer most?
Those dependent on consumer spending and public investment and ... and ...
Seems to cover most of us. - Will there be any winners?
“Most obviously the export sector ....”
I wasn't aware that export was a sector but Deloitte says it is. - Conclusions
May not be all doom and gloom but fairly close to it!
