Fiscal Fallout: The challenge ahead for public spending and public services

In October 2010, the Coalition Government set a course for public spending that represented its defining mission. It was hoped that four years of unprecedented cuts and tax rises would fully repair the public finances by 2014–15, in time for the next election.

Since then the economy has performed more poorly than expected, and growth in its underlying  productive potential also appears to have been weak. As this new analysis shows, these developments have profound consequences for the Coalition’s plans, requiring much greater spending cuts or tax rises than were implied even at the last Budget, to get the public finances back on track after 2014. The implied cuts also have huge implications for the ways in which policymakers think about the delivery of public services to boost their productivity and cushion the blow of cuts.

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