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Comprehensive Spending Review

So, after what seems like an age since it was first announced, we have the detail of the most far reaching spending review for decades. First some of the key points:

The chancellor has announced that something like 490,000 public sector jobs could be lost. This is close to one in ten between now and 2015.

So, after what seems like an age since it was first announced, we have the detail of the most far reaching spending review for decades. First some of the key points:

The chancellor has announced that something like 490,000 public sector jobs could be lost. This is close to one in ten between now and 2015.

The average cut in departmental budget is about 19%

The aim of this is to eliminate the structural deficit by 2015 or within the lifetime of this parliament.

£7bn is to be cut from the welfare budget.

Funding to the police from the Home Office is to be reduced by 4% a year.

The normal age for retirement will rise to 66 by 2020, four years earlier than planned.

The NHS budget has been protected with more funds promised for social care.

There will be a permanent levy on bank profits.

There will be an 8% reduction in the Armed Forces budget which will mean fewer personnel. On a brighter note the aircraft carrier will still be built securing many local jobs.

So what does all of this mean? Well after an extended period of borrowing ever greater sums it appears we all now have to tighten our belts and brace ourselves for the lean times ahead. Bank of England governed Mervyn King was quoted yesterday as suggesting that the next ten years may be a ‘sober decade’. The aim of the review – to eliminate the structural deficit within the life of this parliament is ambitious and will undoubtedly lead to some pain in the years ahead. Public sector workers and the middle classes, those intending to go to university, all of these groups will be squeezed in the years to come.

And what does this mean for clients of RIS. Well those not fortunate to have retired yet may well have to work a little longer and may have to save a bit more towards their retirement income. This means that properly planning for your retirement is more important than ever. It is never too soon to start thinking about those years when work will be gone along with the income that goes with it.

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