Osborne blunts the axe – slightly

As expected, the Chancellor announced reductions in public spending – though not quite as severe as indicated in the Emergency Budget last June.  Government expenditure will fall by 3.3 percent over four years rather than 3.6 percent as expected, leading George Osborne to state – correctly – that departmental budgets will be higher than those pencilled in by Labour – an outcome many may not regard as desirable.  In fact, Osborne will be spending 2 percent more in 2014/15 than Gordon Brown was in 2008/9. Departmental spending will fall 10 percent rather than 13 percent – largely paid for by more optimistic assumptions about savings on welfare and debt interest payments.  Capital spend was hit the hardest – being cut by 28 percent.  Overall, public finances are still on track to eliminate the structural deficit (less capital spend) by 2015/16.
 
This is an unprecedented change in the direction of public spending.