Is spending going to have to be cut? Sure, but I don\’t think it\’s going to be as bad as this:
Allow me to paint you a picture of a country mired in chaos. The unions are in open revolt. Public sector workers have just stomached their biggest pay cuts in living memory; many face losing their homes. In a desperate attempt to bring the budget deficit back under control, ministers are considering slashing child benefit by a fifth – the biggest attack on the welfare state since it was set up in the first half of the 20th century. The government\’s popularity is at historical lows.
A third of teachers in Latvia have been laid off; the rest have endured savage salary cuts, leaving them barely above the minimum wage. Many have seen their pension entitlements slashed by 70 per cent; doctors and police officers face sacrificing a fifth of their pay. According to local reports, the state has cancelled some scheduled operations and hospitals are turning away some sick patients.
The reason I don\’t think the UK is going to get this bad? We\’re not trying to defend a fixed exchange rate. Latvia and Ireland are.
They\’re having to do this cutting because they\’re part of the euro (or at least with a pegged exchange rate to it) and we won\’t have to do that for we\’re not.
Cuts? Sure, but we\’re not going to have to deflate the economy in the same way they are.