All hell will break loose


osborneWith all the foreboding of Enoch Powell, the Daily Telegraph's Benedict Brogan recently suggested that ‘all hell will break loose’ when the outcome of the Comprehensive Spending Review (CSR) is announced on October 20th. This financial Armageddon scenario is set to produce massive job losses but, aside from the rhetoric, what will we actually get?

The CSR is very much a top-down review. To that extent, it will focus on the key macro-economic data, notably Total Managed Expenditure (TME), public sector net borrowing (PSNB) and public sector net debt (PSND). Most Departments, though not necessarily all, will have agreed their medium-term spending budgets. Some, though, may still be recusants – the social security and defence budgets being obvious areas of conflict.

Although there may be some headline cuts – RAF planes for example – much of the detail within individual budgets will remain outstanding. The relevant Secretary of State will have to set priorities. Of course, such a scenario is fertile ground for lobbyists, who will be unleashed like ‘dogs of war’. BAe Systems and BA will be amongst the leading corporates arguing their cases, notwithstanding lobbying companies acting on behalf of their clients.

For the media, it will be challenging times. The BBC, in particular, will have to retain a political balance between the Coalition’s case and that of the Labour Party. Pressure groups will be fighting ‘like ferrets in a sack’ to get TV air time. The Child Poverty Action Group, opposing cuts in Child Benefit, will be competing against construction companies challenging cuts to the road-building programme.

It is certainly not ideal, but hard times must. The fact that Moody’s has recently endorsed the UK’s AAA sovereign debt rating underlines the rationale for the tough choices inherent in the CSR: financial markets have been reassured. But is the general public prepared for October 20th and its aftermath?