I WILL attempt this week not to use the c word. The c word being cuts. Oops, I’ve gone and done it already!

The reason that I will not be using the c word is that the Government are not taking away all spending, as the impression has been made in some quarters, just that the increase in spending will no longer be made at the same rate as before.

Government spending will still rise by a total of five per cent over the next three years.

The City’s reaction to the Comprehensive Spending Review was generally very positive, with the stock market rising strongly on the day, and the day after, having had time to reflect on the details.

Although some of the measures introduced had been largely publicised, or leaked, in advance of the announcement, analysts and number crunchers in the City were burning the midnight oil to provide traders and investment managers the nitty gritty low-down of winners and losers by the next day.

Our expectations for both growth and inflation remain unchanged.

We believe the Chancellor really has done enough now to safeguard our AAA rating.

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.

As the Governor of the Bank of England said last Tuesday, we are all going to have to save more over the next few years and these decisions should create a more favourable environment for the investment of those savings.

While the spending review may be important, and will impact on many people’s lives in a very real way, I am limiting my views here to the effects on financial markets.

We need to broaden our take to a more global level.

While the reduced rate of increase in spending is important in the context of the UK, we need to keep in mind the global picture and remember that such numbers are small on a global scale.

There are some bigger influences on markets at the moment, which make a lower increase in spending look like an aside.

Let’s start with the possibility of further Quantitative Easing (QE).

Ah yes, I hear you cry, reduced rates of spending increases must surely make the possibility of further QE in the UK more real.

Well, yes and no.

Anything that poses a potential threat to growth must be said to increase the possibility of QE.

The question is does the reduced rate of spending increases pose a threat to growth?

And the jury is still out on that one.

There are so many influences on growth (not least what is happening in the wider global economy) that economists seem unable to agree just what (if any) the effect will be.

So, is more QE likely?

The latest Bank of England minutes would suggest no... or not yet.

Mervyn King appears yet to be persuaded by the argument.

What would the Bank of England, in QE, buying more Government bonds do?

It would profit leveraged hedge funds that have gone long on Government bonds, and almost certainly lead to a loss to the Bank of England.

No wonder they are hesitant.

■ Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt. Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.