My response, briefly:
- Sometimes it's appropriate to run up your credit card to tide yourself over a problem - the recession definitely qualifies. Government spending is a pretty mainstream response to help mitigate an economic downturn.
- Spending cuts and tax rises might make a small difference, but the thing that will really cover the debt is economic growth. The UK's tax take is especially countercyclical and will rise sharply when GDP growth and profitability return.
- The return of VAT to 17.5% in twelve days will make some impact in itself (raising about £12 billion), but might be more valuable as a credibility device: the government showing investors and markets that they are serious about getting the deficit under control.