Pre-budget nerves

APA looked quizzically at an announcement today by Gordon Brown that the government will slash consultancy and marketing costs to help halve the budget deficit. And this only two days before Labour updates its tax, spending and borrowing plans.

The government faces pressure from markets and voters to give a credible plan to cut a deficit set to top 12 percent of gross domestic product this year. A windfall tax on bankers' bonuses and other possible measures on the wealthy could be on the cards in December's pre-budget report as Labour tries to set a clear dividing line between itself and the Tories. The Conservatives have said they will take an axe to public service costs to cut debt faster than Labour without harming frontline services such as health and education.

APA believes that plans outlined by both main party would do little to dent the record budget deficit and believe that big tax rises and a very sharp squeeze on spending will have to take effect whoever wins the next election.

The Prime Minister outlined an extra 3 billion pounds in savings over four years through cutting advisory budgets and embracing new technologies such as the Internet -- on top of 9 billion pounds of planned efficiencies announced earlier.

Gareth Osborne of APA said, “The government has a sad and sorry history when it comes to embracing technology; almost every contract for development has come in late, over budget and below expectation on its performance. Adding financial necessity to the equation will only add to the risk and limit the return.”

Gareth, APA