Is the UK government cutting the budget too quickly?
Today's announcement that the former UK government's £540 million advertising budget will be slashed by the coalition government is just the latest in a long line of budget reductions. While the government has already announced multibillion pound cuts in the public sector budget, this is literally only the tip of the iceberg and there are far more controversial announcements to follow. However, is the UK government cutting the budget too quickly?
The truth is that in difficult economic times it is very easy for incoming governments to slash public sector spending and government spending with the vast majority apparently coming from "efficiency savings". However, whether or not the UK government is slashing the public sector budget too quickly remains to be seen because hopes that the private sector will take up the "slack" appear to be very wide of the mark at this moment in time. So if the private sector is not in a position to take up the shortfall, where does that leave the UK economy?
Taking away tens of millions, if not hundreds of millions, of pounds from the UK economy in a very short space of time will obviously have a detrimental impact on the performance of the UK economy in the short to medium term. Whether or not this impact upon the UK economy could push the UK into recession remains to be seen but the government is currently walking a very dangerous tightrope.
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