Alistair Darling's plan to reduce deficit under scrutiny

Dec 10 2009 by Andy Richards, Birmingham Mail

THE small print of the Pre-Budget Report will come under scrutiny today as economists try to work out Alistair Darling’s strategy to bring down the country’s £178 billion annual deficit.

The Chancellor insisted yesterday he would halve the deficit over the next four years in an “orderly way” that would not threaten the recovery.

His strategy included a pay squeeze for millions of public sector workers and a national insurance hike.

However he was forced to concede the recession in Britain was even deeper than previously thought, with the economy shrinking by 4.75 per cent this year compared with the 3.5 per cent he forecast in the Budget in April.

And he was accused by the opposition parties of having “ducked” the most difficult decisions, with billions of pounds in public spending cuts delayed until after the general election.

Unions reacted angrily to the news that – apart from the armed forces – public sector pay settlements would be capped at 1 per cent from 2011, while retail price inflation was set to hit 3.5 per cent.

Businesses, meanwhile, warned the planned doubling of the increase in National Insurance contributions by employers and the self-employed from April was effectively a “tax on jobs”.