Blackfriar: Review that has comprehensively split the economists

Some said drastic action is essential, while others argued that it will tip the UK back into recession.

On the negative side was independent think tank Demos, whose director, the former Labour minister Kitty Ussher, said: "Cutting so much so quickly has always been a gamble, but the stakes are now rising by the day.

"The economy has started wobbling because people fear how the Spending Review will impact them.

"The public sees the need for cuts but not the speed at which they're being done. Osborne risks alienating people and slowing the growth that is essential for recovery if he doesn't now focus all his efforts on rebuilding confidence."

She was joined by Trevor Greetham, of Fidelity Investment Managers, who said: "Ironically, public spending cuts could lead to a further increase in Government debt if they push the economy back into recession.

"The UK is under much less pressure from the markets to cut Government spending than is commonly believed. The UK is not Greece."

But others welcomed the CSR as essential in preventing the UK from being downgraded to the same status as countries such as Greece.

"We believe the Chancellor really has done enough now to safeguard our triple AAA rating," said Martin Payne, divisional director of Brewin Dolphin in Leeds.

"The ultimate prospect of sound public finances should give business more confidence to invest and reassure the markets, which is good news in the long term for investors and savers as well as the country as a whole."

There was much relief that the Chancellor stuck to his guns, neither toning down the cuts or making them more stringent.

"From a macro perspective, they've obviously kept the spending cuts very similar to what they said they were going to do," said George Buckley, economist at Deutsche Bank. "I think the markets should be reasonably happy with this. The Treasury will be hoping this improves confidence now that it's all out in the open and there's no more issues about where the spending cuts are going to come from."

Indeed the markets did seem fairly happy with it all.

The FTSE 100 appeared fairly immune, closing up 25 at 5728.9, thanks to a strong performance on Wall Street.

The lack of surprises meant that gilts hardly reacted and ten-year yields were flat at three per cent.

The pound's decline following the BoE minutes earlier in the day were subsequently reversed and sterling rose more than one per cent to 1.586 US dollars, although it fell marginally to 1.14 euros.

Economist Howard Archer at IHS Global Insight said that perfectly reasonable cases can be made for both pressing ahead with the spending cuts and slowing them down – as is evident by the intense debate that continues to rage among politicians, economists and other analysts.

"The major spending cuts will undeniably weigh down on economic growth and there are serious concerns that it could derail an already fragile UK economic recovery," he said.

"This is a risk that the coalition Government clearly believes is worth taking, as they argue that the longer-term risks to the economy of not taking strong corrective fiscal action are even greater."

Dr Archer added: "If there was an obvious answer, there would not be such a rigorous, ongoing debate."

Indeed only time will tell who is right.

One thing is for sure, growth is going to be very slow for the next two years.

But so far the City, judging by the muted reaction of the stock exchange, gilts and sterling, is giving the Chancellor a tentative thumbs up.