All governments will broadly keep to the 2015/16 spending plans. The issue is what the path of deficit reduction will look like through 2016 and there is a clear and important policy disagreement on those plans. First, it makes no sense to treat capital and current spending as the same in terms of deficit reduction (as the Conservative plans do). Low investment has been one of the most important reasons for low UK productivity and performance over the long haul and since 2010. Second, current plans for deficit reduction through 2020 the Chancellor is proposing are unnecessarily harsh. The implied cuts in unprotected DEL spending (transport, justice, local government, etc) are on the order of 26%, even greater than they have been over the previous 5 years. The shrinking of the state to this size is an ideological choice. Third, I do not believe that the magnitude of the cuts the Chancellor is planning through 2020 will be politically possible to achieve even if the Conservatives won a majority. The attempt to impose them, however, could cause serious damage. One lesson we have surely learned since the start of the financial crisis is that the premature fiscal austerity imposed in the UK (particularly in the 2010-2012 period) and in the eurozone has been major policy mistake. Income and productivity growth would have been healthier from a slower pace of deficit reduction as many of us have consistently argued.

Sir Christopher Pissarides, Regius Professor of Economics, LSE and Associate of the Macro Programme at the Centre for Economic Performance
Yes and yes. The deficit reduction plans combined with the planned tax policies are deflationary and will be difficult to implement, partly because of economywide deflationary pressures and partly because of the needs of the NHS and other mandatory spending programmes

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