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CHANCELLOR CONJURES AWAY GLOOMY DEFICIT WITH TOUGH CUTS

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Chancellor Kenneth Clarke assumed the guise of a fiscal magician yesterday by conjuring away previous gloomy projec...
Chancellor Kenneth Clarke assumed the guise of a fiscal magician yesterday by conjuring away previous gloomy projections of large budget deficits over the next few years, the Financial Times reports (p1).

In a series of front page articles, the FT says the vanishing act was performed largely through announcing deep cuts in public spending that will hit defence, local government and transport particularly hard while allowing for some growth in social security spending..

The paper says Mr Clarke's gamble to unite the Conservative party behind a package of some tax increases and deeper cuts appeared to have paid off, with the Tory right especially applauding the £10 billion worth of extra spending cuts over the next three years.

But it says traditional applause for a skilful Budget masked unease over the implications of a package which ministers admitted was much tougher than it looked.

The cuts - achieved by a reduction in the public expenditure control totals introduced last year - will by the Chancellor's own calculations represent 'no less than £15bn' once the projected growth of an economy in recovery has been taken into account.

Financial markets gave a warm welcome to the Budget, marking up shares, gilts and sterling in response to a fiercer than forecast attack on the deficit.

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