well, in part, inflation

if prices are going up by 2% a year, but you're only increasing spending by 1% a year, then you get less for your money each year.

(And in some big parts of what the government spends its money on - eg health - inflation is probably quite a bit more than 1% a year. So the cuts, in real terms, would need to be larger.)

Also, when you come out of recession, some types of spending have to go up. eg, unemployment's quite a bit higher than it was. So more people are claiming benefits than previously. So again, you have to cut other things to make room for that.

And when we had the recession, and tax revenues fell a lot, but spending didn't fall (indeed it went up, for the reason above), the government had to borrow, And so debt interest payments went up a lot.

So even if overall spending is growing by 1 or 2% a year, that might still entail some pretty significant cuts on some thigns that you want to spend money on.

Posted By: Tricky Hawes on November 19th 2010 at 15:51:47

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