'Enormous' impact of cuts will affect 'whole way of life'

DAVID Cameron will warn today that the impact of the government's plans for slashing the deficit will be "enormous" and worse than he had feared.

• According to David Cameron the cuts will be worse than feared Pic: Getty

The Prime Minister will say that the proposed cuts will affect "our whole way of life" in the UK and could be felt for decades to come.

Mr Cameron is set to make the comments in a keynote speech on the economy and how his Tory-Lib Dem administration can reduce Britain's 156 billion annual deficit.

The Prime Minister's comments come as his Chancellor George Osborne looks to prepare the ground for the emergency Budget on 22 June.

Mr Osborne and Danny Alexander, the new Chief Secretary to the Treasury, will tomorrow publish the principles meant to underpin both the Budget and the spending review which come later in the year.

Meanwhile, the Prime Minister will warn today that nobody will escape the effects of the coalition government's strategy to tackle the deficit and growing public debt.

Mr Cameron is set to say at an event in Milton Keynes: "How we deal with these things will affect our economy, our society – indeed our whole way of life.

"The decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come. It is precisely because these decisions are so momentous, because they will have such enormous implications, and because we cannot afford either to duck them or to get them wrong that I want to make sure we go about the urgent task of cutting our deficit in a way that is open, responsible and fair."

Mr Cameron went on to say that the government would need public support to tackle the national deficit.

He said: "I want this government to carry out Britain's unavoidable deficit reduction plan in a way that strengthens and unites the country.

"I have said before that as we deal with the debt crisis we must take the whole country with us – and I mean it.

"George Osborne has said that our plans to cut the deficit must be based on the belief that we are all in this together – and he means it."

The Prime Minister, Mr Osborne and Mr Alexander will announce a process to "engage and involve" the whole country in "the difficult decisions that will have to be taken".

A Treasury source said Mr Osborne wanted to "revolutionise" the way that public services were delivered.

The Prime Minister is also to set out why the government needs to take such "painful" measures, saying the debt problem facing the government is "even worse than we thought" and the implications could be "more critical than we feared".

He will say that the government must deal with the country's debts now or confidence in the UK economy will take a hit and interest rates will rise.

Scotland's high wages 'may deter investors'

SCOTTISH wages that are "out of line" with the rest of the UK could deter investment north of the border, a leading economist has claimed.

The comments came after a report from the Ernst & Young Scottish Item Club of economists warned that Scotland will lose at least 30,000 public sector jobs because of the effects of severe budget cuts.

Dougie Adams, the senior economic adviser to the Item Club, has highlighted part of the forecast which talks about how Scotland had one of the fastest wage inflation rates in the UK, including south-east England – often seen as one of Britain's most affluent regions.

The paper showed that regional wage inflation for Scotland was 3.2 per cent, compared with 1.7 per cent in the south-east of England. Only Northern Ireland had a faster rate of increase than Scotland, at 4.5 per cent.

Mr Adams said this could be due to Scotland having had a big public sector with good wages, which forced private firms to pay high wages to compete for employees.

He said: "The private sector could be paying out to compete with the public sector.

"If wages grow and this is not covered by productivity it can lead to a weaker economy.

"Part of the way out of economic difficulties for Scotland is for it to be an attractive location for investment, but if wages are out of line there can be difficulties."

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