CUTS? What cuts? We have all been the victims of a massive Government campaign of spin. Lurid statistics are produced daily to tell us that we are approaching economic Armageddon and our financial future is going to be dire.

Yes, you could believe it if you look only as far as the headlines. But here are some of the facts which the Government’s smoke and mirrors department doesn’t talk about.

The sums in Chancellor George Osborne’s June Budget speech show that total public expenditure will rise from £669bn in 2009 to £697bn this year. In other words, the supposedly austere coalition plans to be even more profligate than Gordon Brown. And by 2015, at the end of the whole five years’ programme of “cuts”, public expenditure will be £686bn. This is not a cut: it is an increase.

The doomsayers point to the Thirties’ recession when cuts allegedly put millions out of work. What was required then, it is said, is what is required now: massive rounds of printing money and a vast increase in public spending. It didn’t work then and it wouldn’t work now.

Don’t take my word for it. Here’s President Roosevelt’s treasury secretary speaking in 1939: “We have tried spending money and it does not work. We have just as much unemployment and an enormous debt to boot.”

Or come forward to the days of Labour Prime Minister Jim Callaghan, who told the Labour Party conference in 1976: “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending.

I tell you in all candour that that option no longer exists and, insofar as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

Time and again it has been proved that inflating the economy, as Labour’s Ed Balls suggests, costs more jobs in the long run.

Why do the big-spending socialists learn nothing from history? Why do they not listen even to one of their own eminences, Jim Callaghan? Or consider the experience of Denis Healey when he was Chancellor and he had to cancel a trip to the US in order to answer in person to the International Monetary Fund which was demanding cuts in public spending to rectify the consequences of yet another socialist financial splurge.

BEYOND all this talk of cuts, there is one crime crying to heaven for vengeance.

The European Union signed last week a directive to increase the budget. This will cost hard-pressed British taxpayers an extra £900m next year.

Much of the EU budget rise is to be spent on bureaucrats’ entertainment allowances.

Prime Minister David Cameron says he will do what he can to stop this. Fat chance. He says: “It is outrageous that the European Parliament claims it is being responsible by having a six per cent rise in the budget. It is completely irresponsible and unacceptable.

We need an alliance to block increases.”

He means an alliance with other EU nations.

Why so? Because we can’t act alone having surrendered our national sovereignty to Brussels. We don’t need “an alliance”

Dave: we need a referendum on our EU membership – like the one you promised us on the Lisbon Treaty, but then reneged on.

■ Peter Mullen is Rector of St Michael’s, Cornhill, in the City of London, and Chaplain to the Stock Exchange.