With some departments – such as health – enjoying a ringfenced budget, others face being decimated in order to raise billions of pounds to fund infrastructure projects. Budgets will fall one per cent next year and two per cent in 2014/15.
The Ministry of Defence will be hit hard by the cuts but the Treasury has given it special permission to roll-over its existing underspend into future years, ensuring that there is no reduction to the size of the armed forces or to essential equipment.
The Conservatives will stick to their pre-election pledge of ensuring that international aid will remain at 0.7 per cent of GDP. However because the economy has shrunk, the Department for International Development faces a real-terms budget cut of around three per cent for the 2014/15 financial year.
Another department expected to be hit hard is the Department for Business, Innovation and Skills.
Local government also faces an additional two per cent cut from 2014/15, on top of already-announced spending restrictions.