UK News

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from The Great Debate UK:

Entrepreneurs needed if the UK is going to make up the deficit


-Joe White is managing director of The opinions expressed are his own. Join Reuters for a live discussion with guests as UK Chancellor George Osborne makes an emergency budget statement at 12:30 p.m. British time on Tuesday, June 22, 2010.-

The first Tory budget is a critical one. The Treasury and Chancellor George Osborne have been dropping hints for weeks about a big slash in public sector spending in an effort to try and prepare Whitehall for the worst, and to rally the private sector to step in and fill the deficit.

It’s a risky strategy. The belief that you can slash deficits and generate private sector growth is close to Tory hearts, and further encouraged by recent successes in this area by the Canadians.

But the difficulty is that when Canada implemented rapid deficit reduction, the wider global macro-economic climate was much more benign. One person’s spending is another person’s income, so reducing spending will reduce income unless other kinds of spending rise to fill the gap.