Can government departmental budgets take a 40% cut?
As news begins to leak into the press that the UK government will be pushing for up to 40% budget cuts in some government departments there is growing concern about the short to medium-term impact this will have on the UK economy. Despite the fact we have already been warned that cuts of 25% will be commonplace across the board, it looks as though the government may be about to take it one step further and some departments may see their budgets cut by up to 40%.
No matter what the politicians or the economist say there is no doubt that cuts of even 25% in the UK government budget will have an impact upon the economy. This comes at a time when many believe that the UK economy is still fragile and indeed recent figures have shown that consumer confidence is beginning to waver. When you also add in the fact that the property market is, in the eyes of many, showing signs of stalling and mortgage liquidity is struggling then we are potentially moving towards a nightmare scenario.
Those who believe the UK has felt the pain of the recession over the last two years will feel pain to a much higher degree in the short to medium term. Whether this will make David Cameron unelectable at the next election is another factor the government needs to take into account.
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