llamaman,
As to how broke the government is, try looking at this...
UK National Debt | Economics Blog
We may not be as "broke" as some other countries, but we are still broke, and still borrowing £140Bn odd each year to make ends meet (despite the "massive cuts" Labour keep referring to), so continually increasing the size of the overall national debt. Indeed, when the coalition talked about getting rid of the deficit by 2015 (which they probably won't now be able to do), as opposed to Labour which planned to half it, they were talking about the ANNUAL deficit, not the overall one.
If we don't put our own house in order, and end up going cap in hand to the IMF, then any cuts undertaken nationally will be as nothing to any imposed on us externally - external ones will be far more draconian.
As a country we are living beyond our means, and it cannot continue indefinitely.
Cuts in government spending are necessary, where they are made, welfare, defence, education, NHS, etc are decided by the people that our supposed democratic system placed in power.