Austerity may last until 2020 and chancellor may have to make further cuts to welfare, local government and police, claims FT

http://www.theguardian.com/business/201 ... c-finances

If you leave an infinite number of chimps in charge of an infinite number of typewriters, you get Shakespeare. If you leave one chimp in charge of an economy, you get...

An election followed by a Tory/Lib Dem government.

Wow he is optimistic. It will take decades to unwind the debt bubble. Every year or so he announces it will take a little longer before austerity can be stopped.

It'll never be stopped. We need to live within our means. For once most current politicians are, at the very least, aware of that concept now.

There's no incentive for them to do anything about it though. They only think in five year cycles, which is why this has said '2020'. It doesn't actually mean '2020' it means 'the lifetime of the next government'. Thinking long term is what the civil service is supposed to be for.

The problem is as the government cuts spending it cuts the incomes of the public and that will mean that eventually everyone will suffer from falling disposable incomes. How will you cope with a 40% cut in your income or a 50% drop in the value of your home which is what has happened in Greece and Spain.

Greece is hardly comparable. They have massive, massive tax evasion there. Everybody does it almost.
Plus their public sector pay was very high.
Spain is a more realistic comparison. Thankfully were not as reliant on the budget end of the tourist market.

I feel better already.

Yes but wages in Spain have fallen more than 25% while UK real wages are 8% lower than 2008. Each country has its specific problems. Though how you managed to forget the £130 Billion of taxes avoid annually here shows that we do it just as much as anywhere else. My point was that real wages are still falling in the UK albeit much more slowly than they have in Greece, but they are still falling and will continue for as long as austerity is the policy. So it gets back to my original question how would you cope with a 40% cut in wages.

Youu areconfusing cause and effect. Spain and Greece went effectively bankrupt, we are not. The UK budget deficit hasn't fallen very fast because austerity here has been quite mild -a consequence of being slightly overdrawn rather than utterly broke. Government Op Ex spending doesn't generate growth and reigning it in a little doesn't have the absurd consequences you assign to it.

All local councils have to eliminate debt by 2015/2016 over here.

Local councils debts are probably counted as part of the central governments debt which is what happens here. Longer term though once the debt is cleared they do not have to cut spending any further.