A (relatively) painless 50 billion pound haircut
Expect both UK political parties to be thumbing through the latest publication from the Institute of Directors, catchily entitled How to Save 50 billion pounds. There’s plenty of room for disagreement on the details, but the bloated public sector needs to go on a cash diet, and the government’s 200 billion pound-a-year deficit removes any other option.
The worked example of Canada shows that it can be done without merely shelving all the capital projects (although there are surely plenty of those which could be postponed indefinitely, too). The biggest item, a pay freeze in the public sector together with a modest step towards charging the state employees for the true value of their accruing pension rights, would save 9 billion pounds for starters. Let’s hope George Osborne is paying attention.