Coalition figures out the cutbacks

The fact that improvements to Yorkshire train services may have to be pushed back, and that a question mark hangs over the future of a 80m loan to Sheffield Forgemasters, is indicative of the new Government's predicament.

These are unpopular decisions. It's also paramount that Ministers consider each scheme's wider economic benefits – and not just the bleak figures on the Treasury's balance sheet.

But, given how the new Government has inherited the largest budget deficit in Europe, it had to act swiftly and follow the advice of Bank of England governor Mervyn King.

It was also a foretaste of the age of austerity that Britain has now entered – far tougher decisions will have to be taken later this year at the Comprehensive Spending Review's conclusion.

It is, of course, right that the Government leads by example and cuts out wasteful expenditure. Compare the numerical detail behind yesterday's announcement to Labour's approach to efficiency savings which was to create more inefficiencies in the way that the country is governed.

Yet, tellingly, Mr Osborne was reluctant to set out how many public sector jobs will be lost – and the cost of making people redundant if this contraction of staff cannot be achieved through natural wastage. Where possible, such uncertainty needs to be avoided, given that the Government is requiring each and every aspect of the public sector to make savings while, at the same time, safeguarding services.

However, as Ministers survey the wider financial crisis across the Eurozone, and the potential repercussions for this country, they need to remember that a flourishing private sector will be the most effective way of stimulating growth and, therefore, raising tax revenue to cut the deficit.

So far, Mr Osborne has concentrated his efforts on Whitehall departments and quangos. He has said very little about how he, and his coalition partners, will create a thriving culture of enterprise in regions like Yorkshire to offset the public sector cuts that are, frankly, only just beginning.