The formidable challenges facing the Chancellor of the Exchequer as he prepares his Autumn Statement are examined in a new report, The Long Downturn, published today by the Chartered Institute of Public Finance & Accountancy (CIPFA).
The Government's current economic strategy relies on balancing austerity with growth. To date, plans to cut back spending have stayed firmly on track, while growth has been disappointingly elusive.
Going forward there is every likelihood that more emphasis will need to be placed on efforts to stimulate growth - perhaps via tax incentivisation of private sector investment or by public sector investment in capital infrastructure projects. Any major investment will have to be paid for, however, which may require further tightening of public spending in other areas.
The report concludes that in any event, cuts in public spending will need to be managed with very high levels of skill and care by public sector organisations. Public support for and tolerance of cuts is likely to become increasingly strained as public bodies are forced to contemplate reductions in sensitive services. Meanwhile perceptions of fairness, reflecting where cuts ultimately land and whom they most affect, will be a critical barometer.
Steve Freer, CIPFA's Chief Executive, said,
"The Chancellor is having to drive with one foot on the growth accelerator and the other on the austerity brake.” The ongoing problems in the Eurozone are severe hazards on the road ahead.
"The story on austerity is 'so far, so good' but there is no room for complacency. He will want to continue reining back public spending as aggressively as possible, while crucially staying on the right side of the public's tolerance of cuts.”
“On growth, the story is much less positive. He is likely to be searching for more levers to stimulate the economy, but will also be mindful that these initiatives have to be paid for, potentially by further tightening of spending plans.”
"The critical bottom line is that both strands of the strategy have to be working to deliver the deficit and debt reduction results required."
CIPFA Press Office
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Notes to Editors:
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CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Our 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed. As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications are the foundation for a career in public finance. They include the benchmark professional qualification for public sector accountants as well as a postgraduate diploma for people already working in leadership positions. They are taught by our in-house CIPFA Education and Training Centre as well as other places of learning around the world. We also champion high performance in public services, translating our experience and insight into clear advice and practical services. They include information and guidance, courses and conferences, property and asset management solutions, consultancy and interim people for a range of public sector clients. Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance. We work with donors, partner governments, accountancy bodies and the public sector around the world to advance public finance and support better public services. This includes the development of local professional qualifications in African countries like Lesotho and Nigeria and in Europe in post conflict states in the Balkans.