Osborne maps out future cuts

The chancellor says that a further £25bn worth of spending cuts will be needed before the deficit is eliminated and Britain returns to surplus.

This is the first time that George Osborne has spelt out the scale of public spending cuts he believes are necessary although the £25bn figure has been forecast by organisations such as the respected Institute for Fiscal Studies.

The cuts are needed - he says - because, although the deficit has been cut, borrowing is still around £100bn per year and half that sum is paid every year in interest payments on Britain's debts.

This announcement is as much about politics as it is about economics.

Mr Osborne wants to to set the political baseline for the economic argument in the run up to the next general election.

The government plans to give MPs a vote this year on their deficit reduction strategy. If, as expected, Labour refuse to back his plans he will accuse them of planning to run a higher deficit or to raise taxes in ways which they have so far failed to spell out.

Ed Miliband and Ed Balls are likely to respond that the chancellor has missed his previous targets for cutting both the deficit and Britain's debt.

Later on Monday, George Osborne may use a speech to suggest the scale of new welfare cuts he wants to find. By cutting welfare he would be able to protect departmental spending from even deeper cuts.