UK looks ahead to austere future

London: The United Kingdom is heading for a major spending cut as part of an austerity programme. Following are some of the key questions being asked.

Why is the next spending review starting now?

Formally it is not yet under way. Treasury officials make a "working assumption" that the review to include all years until 2016-17 will be published in the autumn of 2013. That means looking at the big picture now and beginning to work on broad political acceptance of the strategy across the coalition soon.

Where does the £10 billion (Dh58.8 billion) figure come from?

This sum represents the amount that would need to be sliced from state pensions and other benefits a year, to ensure spending on public services would not have to face cuts of 3.8 per cent between 2015 and 2017.

What about other parts of Whitehall?

If the coalition is determined to find £10 billion a year of savings from "annually managed expenditure", this effectively equates to the social security budget. Unless the government defaults, it cannot cut debt interest.

The trade-off is that larger social security cuts would spare the spending on other public services.

While smaller cuts in benefits would mean taking a bigger axe to health, education, police or other services.

Is there a way round the problem?

The Treasury might resort to increasing ‘user' charges.

Undergraduate university funding was effectively privatised in the last spending review and the Treasury will look for other areas it can say no longer require taxpayer money.

What does it mean?

Unless something turns up to suggest the additional cuts are unnecessary, we can expect the longest period of austerity in public expenditure since the Second World War.

Then in the 2020s, there will be another round of cuts or tax increases as population ageing hits the UK harder than anything we have seen so far.

— Financial Times