Beware: Britain’s belt tightening has only just begun
Despite him seemingly to have adopted over the last three years a ‘gradualist approach’ to spending cuts – that’s to say bringing down the inevitable budget axe in stages rather than with one big hit – it is clear from George Osborne’s Spending Review that further tax hikes will be on their way.
In yesterday’s Review, the Chancellor announced the departmental cuts coming into effect in the year 2015/16 – although they will likely set the tone for many years after – that will total £11.5bn.
Transport, The Treasury, The Cabinet Office, Justice, Food and Rural Affairs, and Environment, amongst others, will lose about a tenth of their budget compared to 2014/15. Other areas, including Health, Schools, Intelligence Services and, somewhat bizarrely, ‘International Development’, or Foreign Aid, are said to be ring fenced.
Whilst the cuts could, unfortunately, adversely affect many across the country, it is clear that the slashed budgets by themselves will not be able to tackle the UK’s staggering deficit. And this will be a major priority, if not the major priority, for whichever political party, or parties, form the next government.
With this in mind, I predict that after the general election – when, naturally, it is politically ‘safer’ to do so – we will see even harsher cuts and more tax rises.
The plain facts are that the next government is expected to have to find an additional £40bn in cuts in the two years after 2015/16, and it is unlikely that it will be able to do this only by reducing departmental budgets. Therefore, a toxic combination of heavier cuts and tax increases are, in my opinion, to be expected.
In short, Britain’s belt tightening has only just begun.
As such, I wouldn’t be surprised to see an increasing number of people between now and the 2015 general election seriously considering moving themselves and their funds out of Britain in order to escape the fallout of the reduction in public spending on services (and the inevitable consequences that this will bring in communities up and down the country) and in order to safeguard their hard earned money from the likely government raids.