Ministers in Cardiff are braced for Wales’s annual block grant, currently worth more than £15 billion, to shrink.
Deputy First Minister Ieuan Wyn Jones said the Assembly Government was “expecting a very, very difficult announcement” and that the CSR would be “the most far-reaching event in financial terms since devolution was established in 1999.
“If the plans as they are outlined in the June emergency Budget come into force, then they will represent the deepest and most sustained cuts to public services since the end of the Second World War.”
The timing of the CSR has forced the Assembly Government to delay publishing its draft budget for next year by two to three weeks.
It has teamed up with the other devolved administrations to warn that the UK Government’s effort to reduce the deficit will cut spending too far and too quickly.
The First Ministers of Wales, Scotland and Northern Ireland recently signed a joint declaration saying the axe could fall while private sector demand is weak and businesses are struggling to get finance.
Mr Jones said: “My feeling is that people’s lives have improved, and if you look at the scale of cuts recommended on real terms, then by 2015 a lot of those services that have been established will be in danger.”
The Assembly Government yesterday found out plans for a multibillion-pound defence training academy, hailed as a massive boost to the South Wales economy, had been cancelled.
First Minister Carwyn Jones said the decision to scrap the project at St Athan, in the Vale of Glamorgan, was a “betrayal of the people of Wales”.
Speaking at question time in the Senedd, he listed other public sector cutbacks, including the proposed closure of Newport’s passport office where more than 250 jobs could go.
On Monday, plans for a major tidal power scheme in the Severn estuary were dropped after a feasibility study warned it would be costly and require public sector investment.
“I do wonder sometimes what we have done to deserve all this,” the First Minister said.
South Wales Chamber of Commerce managing director David Russ said: “Wales is the worst performing region in relation to GVA and GDP and we have the highest proportion of public sector employment.
“If significant cuts are made to the public sector the burden will fall upon the private sector at a time when we are trying to drive economic recovery forward.”