Chancellor George Osborne warns Britain will need to make another £25billion in spending cuts after the 2015 election.
The Chancellor said difficult decisions would have to be made about where they are made.
But he signalled the nation's welfare budget should bear the brunt of another round of cost-cutting.
Mr Osborne will use a speech in Birmingham today to warn the country faces a year of hard truths in 2014.
He will caution voters that tax cuts can only be afforded if further significant reductions are made in public spending.
Despite the economic recovery gathering pace, underlying problems are said to remain.
He told BBC Radio 4's Today programme: "We need to find a further 25 billion pounds of cuts after the election.
"We have to make decisions about where those cuts are to be found."
For full coverage of George Osborne's speech today, visit Southwestbusiness.co.uk.