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Melissa - They must cut public spending to reduce and then eliminate the deficit.
Like individuals governments cannot keep spending more than they have as income and that is what the deficit is, excessive spending. The government is borrowing huge sums from investors who invest to get a return relative to risk. If the investors lose confidence in the British economy to service that debt then interest rates will increase. What the government spends on interest (already more than is spent on the NHS) will increase. The amount of debt on which we are paying this interest is still increasing on a huge scale. It is unsustainable and must be dealt with.
Relate it to your own finances. Imagine you spend £5 for every £4 you have in income with the difference being made up by your credit card. How long can that go on? What is the solution? Cut spending and earn more is the answer.
The deficit is around £156bn - that is what is being spent by the government in excess of income. They are dealing with this by a combination of spending cuts (c. £80bn) and tax rises (c. £20bn) with the remainder, it is hoped, being dealt with by increased economic activity as we emerge from recession. It is the latter, private sector economic activity, that we must depend on for new jobs.
We have no choice in the matter, Melissa. Even Alistair Darling claimed £40bn of cuts would be needed 'worse than Thatchers' and he is one of the guillty men who's economic mismanagment created this situation. His half-measures would not have been enough to prevent a downgrading of Britains credit rating and higher interest rates.
These higher interest rates, by the way, would not only be paid for by the government, they would also be paid by businesses and us as individuals. That really would damage growth prospects and would cause massively more unemployment.
Better to tackle the problem now, suffer the pain and get it over with. If we delay the pain to later, it would be a lot worse.