Markets approve of the spending review

The chancellor, George Osborne, set out his plans to mend the UK public finances this week. And the markets' reaction? Positive.

George Osborne set out in detail this week how he plans to "restore sanity" to public finances. The government aims to cut more than £80bn from spending over the course of the parliament in order to slash the budget deficit from 10% to 2%. We face "bigger and more sustained" cuts than any since World War II, said Chris Giles in the FT.

With health and overseas aid ringfenced, and the schools budget receiving a small real spending increase, other departments face a major squeeze. Local government will suffer cuts of almost 30% by the end of the parliament; the Home Office, Justice Department and Foreign Office lose 24%. The police force will have 16% lopped off. On top of the £11bn saving on welfare announced in the June budget, Osborne is targeting a further £7bn a year in savings from reducing benefits. Around 490,000 public-sector jobs will go by 2014/2015.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
MoneyWeek

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.