James Moore: Be warned. When it comes to austerity and cuts, we ain't seen nothing yet

According to the Institute for Fiscal Studies the UK is facing the largest fiscal consolidation of any of the world’s 32 largest economies

The Euro logo outside the European Central Bank in Frankfurt am Main, central Germany (BORIS ROESSLER/AFP/Getty Images)

Outlook Think the austerity years have been tough? That the cuts have been savage? It looks like we ain’t seen nothing yet. According to the Institute for Fiscal Studies the UK is facing the largest fiscal consolidation of any of the world’s 32 largest economies. More even that Greece or Portugal, despite the fact they’re sitting on the eurozone’s economic naughty step.

The Conservatives’ stated plans would see almost all of the needed cash coming from spending cuts.

Some £30bn of those have already been outlined, with £25bn coming off the welfare budget and a further £5bn from measures to tackle aggressive tax avoidance (history suggests taking that one with a pinch of salt).

But more will be needed if the Government is to hit its aim of a £23bn surplus by 2020. And the IFS thinks at least some of it will come from tax rises.

For a start, cuts don’t always save money. Just look at the impact that pruning the social care budget has had on the NHS.

Second, budgets in those departments that don’t have protected status (the NHS, schools, overseas aid) have already been considerably pruned. How many more cuts can the Department of Justice endure, for example, without the courts system seizing up? How long before we have to start talking about potholes in the roads again? And the list goes on.

It would help help if the Government were willing to take a hard look at pensions, and the benefits it still lavishes on those in receipt of them.

In reality it is highly questionable whether an incoming government will be able to achieve such ambitious aims, particularly if it is tightly constrained by parliamentary arithmetic (which is likely).

On the plus side, Oxford Economics reckons it may have more wiggle room than many forecasters believe, given the rosy outlook for the economy (and the IFS’s rosy projections have growth averaging 2.5 per cent for the next four years).

Labour will draw some comfort from that, after being warned that things could get very messy should its forecasts get blown off course.

Getting blown off course is something that should be of considerable concern to whomever makes up the next Government.

It’s far more likely than anyone really wants to admit.