Economic recovery: No prospect for "trampoline" growth in 2011/2012, says David Cameron

In an interview with the Sunday Times (external  website) ahead of the emergency Budget, Cameron said:

There were two levels of optimism in what the [Labour] government was forecasting. One was trampoline growth of 3% and above, and the second theory was that interest rates would always stay low.

It is therefore likely that projections for economic growth will have to be revised down in the emergency Budget. Cameron's view is echoed by the results of  a survey of leading economists (external website) conducted by the Sunday Telegraph. The panel of economists agrees that the Treasury's forecasts of growth in gross domestic product between 1% and 1.5% for 2010/2011 - set out in Alistair Darling's final Budget on 24 March 2010 - are likely to prove accurate. But the panel predicts GDP growth of 2.1% for 2011/2012, significantly below the Treasury's forecasts for growth between 3% and 3.5% over this period.
The Sunday Times reports that it is expected that "welfare and public sector pay would bear the brunt of budget cuts" that Osborne will outline in the emergency Budget." It says:

All public sector workers earning more than £18,000 a year already face a pay freeze next year, but it is understood that curbs in wage rises beyond 2011 are likely to be unveiled in the budget on June 22.

In a coordinated press offensive, Cameron's Deputy Prime Minister Nick Clegg also played his part in efforts to set the stage for the impact of the emergency Budget.
In an interview with the Observer (external website), Clegg described the coalition Government's plans to make "progressive" cuts, modelled on those enacted by "centre-left Governments" in Sweden, Canada and US. He stated that Osborne's package of cuts would not signal a return to the Thatcherite policies of the 1980s. Clegg said:

[F]iscal retrenchment does not mean a repeat of the 1980s. We're going to do this differently. [...] We're not going to allow a great north-south divide to reappear.

Clegg explained his recent U-turn on the perceived necessity of immediate, swingeing cuts to public spending as a "shift" motivated by two factors: rapid changes in the "world around us" (not least the Greek financial crisis); and the views of Bank of England Governor Mervyn King. On the latter factor, the Observer reports:

Another influence was "a long conversation a day or two after the Government was formed" with Mervyn King, the governor of the Bank of England. "He couldn't have been more emphatic. He said: 'If you don't do this, then because of the deterioration of market conditions it will be even more painful to do it later.'"

Interestingly, this is the second time in recent weeks that King's reported views on austerity measures have been leaked. It was reported in the run-up to the 2010 general election that King had suggested that "whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be" (external website).
As the June 2010 economic commentary from XpertHR Salary Surveys notes:

There is no doubt that the new Government has inherited a very challenging set of international economic circumstances. There is also no doubt that its actions on the economy will be closely observed and fiercely judged right from the off. When it comes to the economy, the stakes are therefore extremely high for the new Government.