Happily for the coalition, the current political mood is so geared towards fiscal restraint that there will be little immediate opposition to Osborne's general plans. That will come once the effects of spending cuts are felt in individual constituencies – months, even years, down the line. But there are a few specific flashpoints that are worth keeping an eye on, and which could inspire tension in the short term. Take capital gains tax, for instance: will the government raise it to 40 percent, as Lib Dem backbenchers want? Or will they resist the rise, following Tory backbenchers like David Davis and John Redwood?
My guess is that we'll see plenty of compromise on specific issues, like CGT, with Osborne shooting in between the Lib Dem and Tory positions. But, aside from that, the overall parameters for deficit reduction will be unyielding and relatively hawkish. They need to be for the sake of our economy, and for the markets – whatever it means for LibCon relations in future.