By Daniel Hunter
Responding to this week's Spending Review announcements, Mark Littlewood, Director General at the Institute of Economic Affairs said:
“This was a pretty feeble review of government spending given the huge black hole in the public finances. The Chancellor is attempting to trim back a little here and a little there. There seems to be no overall strategy to balance the budget — but rather just a vague hope that we can get there through by salami slicing.
“The Chancellor seems to think the best way to help enterprise is for the government to spend vast sums of money on infrastructure projects. He praises the private sector for performing remarkably well in very difficult circumstances, but has failed to set out a compelling plan for making it easier to start up and grow a business in Britain.
“Until he sets up a comprehensive growth strategy, the economy will continue to remain relatively sluggish and finally balancing the state’s books will take even longer than presently imagined.”
Prof. Philip Booth, Editorial Director at the Institute of Economic Affairs, said:
“Further savings in government spending should have been found in order to reduce borrowing and taxation. Reductions in taxation would have a much greater impact on growth than if the government uses spending reductions in some areas to increase infrastructure investment.
“George Osborne made a significant mistake by increasing taxation in the early years of the parliament and then being too timid when it came to spending cuts. The much discussed “cuts” are largely reductions in projected increases in spending. This was a missed opportunity to correct that error.”