Next UK government will need to find a further £10bn in welfare cuts or tax hikes to meet deficit reduction plans

To maintain the pace of current deficit reduction plans, a further £10bn of tax rises or welfare cuts will need to be found, according to research from the Resolution Foundation. However, protection of certain government departments means that some areas will be hit much harder than others. For example, by 2018, the proportion of departmental spending going on health is set to rise from a quarter to a third by 2018. In real terms, spending on the department for international aid is up by over a quarter between 2010/11 to 2014/15 while, in the same period, spending on the foreign and commonwealth office has reduced by over 50 per cent. Although final budgets are still being negotiated, the latest spending review for 2015/16 will also see an uneven spread of cuts across departments.

The think tank doesn't make any policy recommendations, but it's clear that whichever party is in power in 2015, some difficult decisions will need to be made. See here for Allister Heath's article in the Telegraph about what could be done to shrink the deficit and address long term challenges ahead of next week's spending review.