LONDON – UK Deputy Prime Minister Nick Clegg has said that
the Comprehensive Spending Review has been a ‘difficult process’ and
that next week’s announcement on departmental budget settlements will
involve some ‘tough decisions’.
“The spending review has been a very difficult process and we as a
government and as ministers, need to be able to look at ourselves and
say we did the right thing,” he said.
In a speech on social mobility, Clegg announced a stg7bn ‘fairness
premium’, Clegg and said that ‘in the context of a very demanding
spending review, these are sizeable commitments.’
Clegg’s speech comes less than a week before the government
publishes its Comprehensive Spending Review on October 20. The review
is set to show deep real-term cuts in departmental budgets through to
2015 as the Chancellor George Osborne moves to close the country’s
fiscal deficit.
While Clegg continues to refer to the ‘tough decisions’ due in the
CSR, some analysts believe the cuts may not be as deep as anticipated.
Several analysts have highlighted an article in last Thursday’s
edition of the Financial Times which suggested the government may have
to ‘reprofile’ its spending cuts.
“There has been some discussion in the media as to whether the
Chancellor may back away from the very tight spending envelope laid out
in the emergency budget. One reason for doing so may come in that some
public sector contracts are associated with significant penalties if
cancelled and have already seen significant funds spent,” said Malcolm
Barr, Chief UK Economist at JP Morgan.
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e-mail: wwilkes@marketnews.com.
[TOPICS: MGB$$$, MFB$$$]