Much more pain to come as cuts deepen after 2015

Public spending (the blue line) is likely to fall to its lowest level since the 1930s. Credit: ONS/OBR

As well as some eyecatching Autumn Statement announcements,George Osborne yesterday warned of "substantial" spending cuts from 2015 onwards.

According to analysis from the Office for Budget Responsibility (OBR), the next Parliament will see public spending fall to "what would probably be its lowest level in 80 years".

Mr Osborne has a ten-year plan of "fiscal consolidation" to eradicate the budget deficit he inherited in 2010.

According to the OBR, we will have seen 40% of his intended cuts by 2015, meaning that we are set for another 60% over the five years of the next Parliament.

Although ministers have spoken about "efficiencies", cuts on this scale will mean sharp reductions in certain departments' budgets.

This outlook is made more severe by two factors - the commitment to protect NHS spending and the Chancellor's desire to reduce the deficit primarily through spending cuts rather than tax rises.

As the graph below shows, one area that will continue to face a real squeeze is local authority budgets.

This graph shows the fall in council spending as a percentage of GDP. Credit: Department for Communities and Local Government/OBR

However, it is crucial to note that the OBR's forecasts are based on current Government policies, rather than whoever is in power after 2015.

As the report says:

For instance, the Tories have said they would want further cuts to the welfare budget to protect spending on core public services, while the Lib Dems would prefer higher taxes on the well-off.

Labour have committed to "balance the books" by 2020 as well, meaning they too would be committed to big spending cuts.