The government are essentially freezing spending, not cutting, not rising.
On it's own, this helps because it keeps some money going around the system, but when you couple this with rise in taxes, it doesn't work.
The problem is that we have had debt fuelled growth, so some loss in trade is inevitable, the idea is to keep spending money on the proverbial credit card, until real growth returns, then that debt can be paid off.
This is rather sound, but doesn't work when coupled with government spending that is already bloated (remember how many councils had annual rises of 6-8% or even 10% before the recession), and with red tape and extra costs that stifle new business.
We need to cut taxes, cut red tape, as well as cut
or spend.
Fine, but what do we use to invest in the country? Borrow more money?
If you buy the stimulus option, then yes, borrow money.
And spend it on large scale infrastructure projects, roads, power (not effin wind farms), things that make business more convenient and practical and cheaper (our high energy prices drive away manufacturing).
Instead we spend it on wind farms (foreign manufacture and labour), aid, money to the EU (stupid amounts of money), rail (but buying foreign made trains).
Now I am not a protectionist, and do not think we should be protectionist. But if the government needs to stimulate the economy, spending it on a whole lot of foreign stuff isn't really going to help is it?