Financial crisis: Cameron braces UK as 'inevitably painful times lie ahead'.

Posted on: 07 June 2010 by Gareth Hargreaves

The recession is far from over and years of pain lie ahead! David Cameron and Nick Clegg are now openly briefing to soften the blow ahead of 'painful cuts' that will impact 'our whole way of life'.

Over the weekend both published articles in the Sunday papers alluding to ‘tough time ahead’. This morning Cameron made a speech, which started the ground work of getting us all used to the idea of a really tough budget on 22nd June.

Am I surprised? Frankly no! I’ve been expecting it, and in some ways hoping for it. As a nation we have been spending far more than we made and sooner or later the ride had to be paid for. As a nation we owe nearly $1.2 Trillion and the interest on this is a mind boggling $100 million per annum. Unless we pay this back and tout de suite in 10 years we will owe $2.2 Trillion or $36,000 for each man, woman and child in the UK.

This is the Labour legacy that is going to bring us to our knees unless Cameron and Clegg can devise a strategy that brings both stability and confidence back to the UK economy. So where is the money coming from – taxes and cuts and job losses throughout the country. I hate to be the prophet of doom but it should come as no surprise if VAT is raised to 21.5% from 17.5% and the range of goods and services that are subject to VAT extended to include children’s clothes and some food items.

Excise Duty on alcohol and cigarettes will take a hit as will airline taxes – these will improve health or help the environment. Government Departments will be sized down and jobs cut. The biggest hit next to VAT will be cuts in funding to local councils, which will result in increases in Council Tax for those councils that don’t make the cuts.

Lots of government initiatives will be given ‘0 increase budgets’ for the foreseeable future and a lot more scrapped altogether. All of this will be done so as to reduce the impact on recovery although this will not be a sacred cow – paying back debt will be top of the list of objectives.

Is this going to hurt? The simple answer is, yes! Is there any other way? No! Should we ever re-elect a Labour government? No, not in my lifetime and I intend to live to a 100 and that’s 35 years away!

It was amusing to hear Alistair Darling ‘poo-pooing’ the Tory view of the economy. I suppose he would do that if he’s trying to fix up his well paid jobs in the City as the exiting Chancellor of the Exchequer!

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