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Once the effect of the 8% annual growth in debt interest payments and rising spending on unemployment benefit are stripped out, spending across government departments will have to fall by an average of 2.3% a year in real terms, said IFS economist Gemma Tetlow. She added that with the government pledged to continue increasing spending on overseas aid, it was likely that all other departments would face spending cuts."Health, education, law and order would all experience real cuts."Chote said it looked likely that the bulk of the savings required over the coming eight years would mainly come from spending cuts rather than new taxes."The main burden of the looming tightening - at least over the next few years - is likely to fall on the users of public services," he said.

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New hospitals and schools only had to be built once, he said.

"I believe after a shock to the system such as we have had, we have to ask ourselves about every pound we spend.

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The chancellor avoided mention of spending cuts in his budget speech, concentrating on a 0.7% a year increase in spending from 2011, which excludes investment in key areas such as schools and hospitals.

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