The Tories’ outright majority indicates that the economy is clearly heading for a major re-intensification of the fiscal squeeze next year. This will represent only the first step towards their ambitious plans to eliminate the overall deficit – which currently equals 5% of GDP – by 2018/19.
However, a government with such a slender majority may lack the will to implement the deep cuts to welfare and departmental spending required by its plans. And by-elections could leave the Conservatives dependent on other parties’ support before too long. Accordingly, we still have doubts as to whether the Tories will be able to make all their anticipated savings.
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