Other spending heads will face the same squeeze as all those public sector workers if their cash allocation flat-lines - 4 to 5% this year, maybe down below 3% next year, but still requiring a deeper real terms cut than officially recognised by the 2.9% inflation rate currently assumed by the Office of Budget Responsibility.

BBC: Budget challenge

Outlining his plans to MPs, based on economic forecasts from the independent Office for Budget Responsibility (OBR), Mr Osborne told MPs the UK economy was now forecast to grow by 0.9% this year - compared with 1.7% forecast in March and 0.7% next year, down from the 2.5% forecast in March.

BBC: Osborne: Growth lower than forecast

ECB's responsibility to contribute to the macroeconomic performance of the euro area economy, which suffers from an unemployment rate of almost 9%.

ECONOMIST: Pressure on inflation