On June 22, 2010, Britain’s Chancellor of the Exchequer George Osborne spelled out his plans to preserve the credibility of Britain’s sovereign debt, to prevent Britain from becoming the next Greece. Through a mixture of 77% spending cuts and 23% tax increases, Osborne proposed to reduce the budget deficit from £149 billion this year, 10.1% of GDP, to £20 billion in fiscal year 2015-16, 1.1% of GDP. Moreover, these projections rests upon the reports of an independent non-partisan Office for Budget Responsibility, not those of his own Treasury department.
Citing evidence from the IMF, the OECD, and other international studies, Osborne stressed that lower spending was more effective than tax increases in reducing deficits. A further reason to emphasis spending reductions is to lower the share of national income consumed by the government rom 51% of GDP to a more sustainable level by increasing the share of ntional income spent by the private sector.
