Federal budget nightmare looms 9:54am 9.05.08

Treasurer Wayne Swan will deliver his first federal budget next Tuesday, which analysts have predicted will be difficult.

Chris Richardson, director of Access Economics, wrote in the firm’s Budget Monitor: “Either we get a horror budget, or we get horror interest rates. That's the ugly choice, but it's one policymakers face.''
 
Richardson says the tough choice Swan needs to make is whether to cut spending or risk more interest rate rises. "It's about $3 billion of spending savings in the year just about to start – 2008/09 – if you want to ward off the next interest rate of a quarter of a percentage point.”
 
Swan has warned the budget will be “tough” and Prime Minister Kevin Rudd has admitted that it will not be to everyone’s liking.