Politically Labour's response was encouraging. Alan Johnson contrasted with Osborne's tone and set out a viable alternative. This is based on believing Keynesian economics instead of the fiscal orthodoxy presented by the Tories. Protecting employment is the best means to protect and encourage growth. The Tory plan to lose half a million public sector workers is likely to lead to more lay offs in the private sector as many firms (like my own) rely on government contracts. Redundancies will increase the welfare bill, not cut it. I hope that Osborne's optimism that the private sector will automatically fill the gap created by the cuts will prove me wrong.
Economically the poorest will have to dig deepest as a result of Gideon Osborne's spending review yesterday. The government's own figures (page 98) show that the bottom 10% will lose a higher percentage of their income after yesterday's changes come into force. The spending review, shown in green, takes the most from those at the poorest end of the scale.
I'm reminded of the 1997 Tory slogan: "yes it hurt, yes it worked." Then as now the Tories are ideologically opposed to the state investment Labour made. They want a smaller state as much now as they did in the 1930s, 1980s or 1990s. The Tories spouted the mantra of change at the election. They were right to, because they will change the social fabric of the country, but they haven't changed at all. This will certainly hurt. I'm not sure it will work.