Osborne tweaks the dinosaur tail

This week's Comprehensive Spending Review (CSR) was never likely to make a big splash. Much of it was leaked and it dealt only with the first tax year of the next parliament, 2015/2016. The markets ignored the review, and even the government didn't seem to be giving it its full attention: there was a typo in the first line of the published statement.

Chancellor George Osborne announced £11.5bn of savings, from which £5bn is to come from efficiency savings in various government departments. Cuts in departmental budgets account for the rest. With health, education and overseas aid ring-fenced, other areas bore the brunt of the cuts. The Cabinet Office, local governments and the Treasury all suffered cuts of 10%.

Some of the savings will be used to beef up capital spending and infrastructure. Osborne also proposed a new welfare cap to control spending on benefits starting in 2015/2016. But he resisted recent calls to include the state pension within the cap.

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What the commentators said

Or even longer, added Allister Heath in The Daily Telegraph. With gilt yields rising, higher borrowing costs are set to flow through to the private sector, undermining growth and tax revenues. And with the world economy still lacklustre, we can't export our way out of trouble. The economic outlook is "grimmer than it has seemed for months". Any increase in capital and infrastructure spending to underpin growth will take ages to be felt. "It is akin to tweaking the tail of a dinosaur," said Michael Conroy Harris of Eversheds. So far, at least, the emphasis has been on planning rather than doing.

As for the cuts, "believe [the efficiency savings] when you see them", said Jeremy Warner on Telegraph.co.uk. And keep in mind that out of total government spending of £720bn this year, departmental spending comprises just £321bn, and much of it is ring-fenced. We really need to get to grips with pensions and welfare, the key chunk of the remaining expenditure, if we are to get a grip on our national finances. "The really tough choices are yet to come."