I think the cuts will dampen the recovery but not half as much as a Sovreign Debt Crisis would. I predict possibly some more QE and very low interest rates for the forseeable....plus a gradual fall in house prices in a very moribund market. Private sector workers have had pay cuts, compulsory lay offs (Honda etc) and redundancies, so if I here another unison official saying "Why should the Public Sector bear the brunt of this" I will fooking explode. Raising Tax thresholds for the poorest in work has to be a good thing and linking the state pension back to earnings rather than inflation is at least a start to stopping the vast majority of private sector workers slipping into poverty on their retirement over the next 30 years! i agree on VAT but it will be used as a stick to beat 'the evil ones', infact it is the easiest and most efficient way to raise tax, brings us up to most EU countries and is, as you say not on food, babies clothes, nappies and books/newspapers. I'm off for a cider.