As the Autumn Statement lays out tough targets on debt reduction, Michael Burton examines the feasibility of planned spending cuts and considers whether austerity is the ‘only game in town’

Although the economy is on the mend, chancellor George Osborne’s wriggle room with the public finances has been severely limited, as this week’s Autumn Statement shows.

A combination of spending pressures and sluggish tax revenues means more austerity, probably more tax rises and certainly continuing cuts in local government budgets, none of which comes as a surprise to town and county hall chiefs, even if it does to the electorate. Every time the NHS calls for more money – which is on a daily basis – the already diminishing pot of money for the remaining public services shrinks still further.

Last week alone, the Foundation Trust hospitals reported that their deficit this financial year will be £271m compared to a planned £54m deficit – with 60 trusts having a combined deficit of £531m offset by surpluses in another 87. The Institute for Fiscal Studies separately warned of an extra £12bn in spending on pensions and other age-related benefits between 2010 and 2020.