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A graph of the share price CI Mouchel eight years.

Public sector outsourcing has been for some time favorite Exchange sector and as the graph above shows, the stock price took off in the back of the nature of contracts as Sir Philip Green shaking head last week left Government largesse.

As the table also indicates, there was a fatal flaw in the history of outsourcing it rested on the belief that the previous Government fiscal incontinence was sustainable. The financial crisis and the election of a coalition that Government is determined to put public finances back on a path such as Mouchel, wisest left shares provides a range of services for maintenance of the roads to manage payroll, high and dry.

Last week, the shares fell another 10pc - although it is not visible on the graph, such has been the extent of the fall in the last three years. Mouchel warned that profits would be weaker than expected after a new Finance Director reassessed what the company can expect to win contracts from public to cut government George Osborne, will make an announcement this week. If you want a picture of the axe falls means at the sharp end business - here it is.

Cannot claim that they were not given adequate warning of what is in store.Next week will provide some details, but the table together is clear since the juin.Un budget squeeze tax total value of ￡ 113bn, including approximately ￡ 83bn will take the form of reductions and tax on the remaining expenditure rises. Resulting in a reduction of 15pc aid spending by Government and, thanks to the ring-fencing of the health and overseas departments, a true Coupe in the departments protected 25pc of current budgets.

A report by accountants PricewaterhouseCoopers predicts impact of significant impact for businesses in private with a reduction in output of perhaps 46bn ￡ by 2014/15 and loss of perhaps of 180 000 jobs in the business services and construction of 100,000.Added to the loss of jobs in public sector jobs about 940,000 could be lost due to declining.

No wonder Andy Street, John Lewis Partnership leader urges Chancellor week last to ensure that he gets all bad news at once. As with the scale of likely cuts, it is the uncertainty which is nibbles business and consumer confidence.

Thus, after our losing and calculate how much child benefit academic fees will cost, we can now look forward to tattier schools, deepest potholes and grimier streets.

The good news, as is the case, is that financial markets are quite good to build in the worst of the scénarios.En effect, they invariably Cook the ténèbres.Tout as the price of the share of the Mouchel prices last week profit warning long before it appeared, it is likely that fears about the economy and market impact review (CSR) expenditures have been exaggerated.

One thing is clear is the fact that capital expenditures will be affected - down by 18pc in terms of cash in 2014/15, according to figures from the Treasury Board.As the economy Investec team has pointed out, it is ironic because the impact of the cuts in investment is proportionally more economies elsewhere — perhaps three times also that a change in tax rates or tax allowances for example.

Less clear is the extent to which the private sector can capture interesting mou.Fait in the year to June 2010, while public sector jobs decreased slightly to 18,000, private sector employment increased by 380 000.John Lewis plans to invest 200 m ￡ in its stores next year up 60pc on its 2008.Le re-balancing far the public sector expenditures can happen more quickly that we expect.

There are three reasons why I think that the market will have CSR in their wake this week.

First of all, spending reductions are considered as key pillars of budgetary coalition.Ajout retail numbers credibility overall does Exchange cela.En second place, with more than half FTSE 100 made outside United Kingdom, the impact of cuts on the overall company profitability gains is less important that the titles this week could suggérer.En Thirdly, with reductions likely to maintain lower interest rates, dividend yields relatively high of market shares will look more attractive the year prochaine.Chaque cloud and everything...

tomrstevenson@fil.com

Tom Stevenson is a Director of Fidelity Investment Managers.Les investment opinions are own

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