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Spending freezes 'would curb UK deficit'

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UK Spending freezes

The Institute of Economic Affairs (IEA) has suggested that putting a freeze on spending would be a good way of curbing the UK's national deficit.

This comes in response to a speech at the organisation by Dr Liam Fox, which made various recommendations in advance of chancellor of the exchequer George Osborne's Budget announcement.

Among the proposals he outlined were certain tax and spending reductions - and director-general of the IEA Mark Littlewood welcomed the suggestions.

He claimed that it is a timely contribution to a debate on how the difficulties surrounding the country's finances are best dealt with.

However, data recently published by Eurostat indicated that the European Union as a whole is experiencing ongoing economic contractions.

The firm's second estimate for the fourth quarter of 2012 confirmed that gross domestic product for the eurozone was down by 0.6 per cent.

Furthermore, the overall picture for the 27 EU members - which includes countries outside the single currency bloc - declined by 0.5 per cent.

These are year-on-year falls of 0.9 per cent and 0.6 per cent respectively when compared with the equivalent data for the final three months of 2011.

Nonetheless, Mr Littlewood remained critical of the Conservative-led coalition government's means of addressing the situation.

He argued that although there has been a great deal of talk about austerity, actual cuts in spending have been minimal.

Indeed, the current government is expected to have added an further £600 billion to the national debt by the end of this parliament.

"The reality is that if spending is to be brought under control, we need to look long and hard at the health and welfare budgets," the expert commented, adding: "If these bills are not reduced, then it becomes a much harder task to get close to balancing the books."

"Dr. Fox's suggestion to freeze public spending for five years at a saving of over £300bn would go a long way to curing the deficit," he continued.

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