The Government would have to double the scale of the cuts it has already planned to come anywhere near to Canada's example of a public sector bonfire, experts have said.
David Cameron has warned the public finances are in a worse position than previously thought, and is said to favour the Canadian model of savage spending cuts to plug the deficit, the Telegraph reports.
The 20% cut in public spending Canada implemented in the 1990s would be equivalent today to some £140bn worth of public spending cuts, says the Institute of Economic Affairs (IEA).
This is dramatically higher than the £71bn the Conservatives signalled they would aim for ahead of the election, and would necessitate the biggest reduction in public spending on record.
THE IMF HAS WARNED euro nations that without more centralised control they risk sinking back into recession.
The IMF accused eurozone governments of relying on "crisis management" and warned they needed to move quickly to centralise economic decision making or risk a double-dip recession.
Reforms allowing the eurozone to impose stricter discipline on government budgets by increasing power at the centre must be agreed along with plans to tackle the structural weaknesses in the European economic system, including labour reforms, it said.
Without action, and quickly harmonising monetary and fiscal policies, growth will stall and public finances will worsen again, possibly dragging down the world economy.
The warning came as European finance ministers sought to calm nervous markets by nailing down details of a massive financial safety net for the eurozone. At the same time Germany revealed budget cuts designed to set an example for its partners in the bloc.
THE TRIAL OF FORMER INVESTMENT banker Jérôme Kerviel accused of carrying out one of the biggest trading frauds in history will open in Paris today.
The 33-year-old ex-trader is accused of losing Société Générale, France's second biggest bank, €4.5bn (£4bn) through unauthorised speculative trades.
At one point before his arrest in January 2008, Kerviel was reported to be trading around €50bn (£42bn) - roughly 25% more than the bank's market value.
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