If middle of the road commentators like Will Hutton are getting their knickers in a twist about this we can be sure there is more trouble ahead. In the '1948 levels' Guardian post linked above he said:
"The IMF, after assessing the experience of 107 countries between 1980 and 2012, recommends that, after a credit-crunch deficit, there should be a balance between tax increases and spending reductions. In Osborne-land over the next five years more than 95% is to come from spending cuts – a global first in self-harm."[my italics]Now I'm not a fan of the IMF and I take its remedies with a large pinch of salt but its obvious that globally too many corporations are paying far too little tax. So are the rich. The 'excuse' for this is that it 'boosts growth' and 'creates jobs' but this is merely self-serving 'free' market propaganda. Tax cuts take money out of our economy - more often than not that money goes overseas or is spent by the rich on things like expensive houses, pushing up the housing market. In any case these tax cuts aren't invested in the productive economy and don't benefit the 99% in any way.
Osborne's strategy is supposed to be about getting rid of the 'structural deficit' which is the difference between the amount governments spend and the amount they get in income. But as in all things economic there is nothing 'scientific' about the structural deficit concept. It's all about how government's choose to run the economy. The point is that dealing with a structural deficit by austerity cuts is a political choice not an economic necessity. There are clearly better alternatives. The obvious problem that we have in the UK at the moment is that corporations are paying too little in tax and there is too much tax avoidance. If Osborne's deficit reduction plan was working the government would be borrowing less - but borrowing has increased because of a shrunken economy and falling incomes and taxes. The fact that Osborne has borrowed more in 3 years than the last Labour government did in 13 years shows the complete failure of his economic policies.
But then Osborne's 'economic policy' is not really an economic policy at all it's a political one. His aim is to complete the work that New Labour started in 1997, to finally destroy the post-war WWII settlement by privatising the public sector and ending the welfare state, thus returning us to the 1930s, with all the attendant poverty and misery that characterised those times.