Britain defends sweeping cuts as 'fair'

21st October 2010, Comments 0 comments

Britain's government hit back on Thursday against charges that its massive spending cuts will hit the poor hardest and may not even be enough to tackle the country's record deficit.

Finance minister George Osborne insisted his plans were fair a day after he unveiled measures that will cost 490,000 jobs, slash government budgets by around a fifth and take the axe to the welfare state.

He told the BBC the process had "involved some hard choices but I think they are fair choices".

"The richest 10 percent are hit hardest... the richest pay the most but everyone makes a contribution," added Osborne, officially known as the Chancellor of the Exchequer.

He rejected criticism from a leading economic think tank, the Institute for Fiscal Studies (IFS), which warned the cuts might not be sufficient to meet Osborne's target of getting rid of the public deficit in four years.

IFS acting director Carl Emmerson said the benefit cuts "on average will impact those in the bottom half of the income distribution more than the top half of the income distribution."

He said it would be a "sensible move" to review the cuts after two years -- adding that the measures were the toughest in Britain since the 1970s when the country was bailed out by the International Monetary Fund.

Britain's Conservative-Liberal Democrat coalition government came to power in May pledging to eliminate the country's 154.7-billion-pound (175.9-billion-euro, 244-billion-dollar) deficit.

British newspapers said the cuts would change the country forever and mark the start of a dramatic retreat by the state from its citizens' lives.

"Ouch! That hurt," read the front page in Conservative-supporting tabloid The Sun, next to a picture of Osborne.

The Financial Times called it "Britain's biggest economic gamble in a generation", while the left-leaning Guardian daily saw a dark future ahead as the axe falls "on the sick, the poor and on working parents."

But the rightwing Daily Telegraph heaped praise on the spending overhaul, saying it signalled that an intrusive state was at last starting to pull in its tentacles.

Osborne said the cuts would save Britain from "economic ruin" and blamed mismanagement by the previous Labour government, which says the cuts are a gamble that could tip the world's sixth largest economy back into recession.

He rejected the IFS's warning that the coalition should have a backup plan.

"We've got a plan now, we know where we are going, we are going to deal with our debts. Yes, it is a hard road to follow, but it leads to a brighter future," he said.

Alan Johnson, finance spokesman for the opposition Labour party, said the cuts were "unfair as well as unwise."

"This slash-and-burn approach is something we wouldn't do," he told the BBC.

Under the cuts, worth around 81 billion pounds according to revised government figures, the coalition will slash nearly half a million public sector jobs over four years from a total of around six million.

Government departments face average cuts of 19 percent except health and overseas aid, which are ring-fenced.

Welfare was one of the worst-hit areas, with savings of seven billion pounds as Osborne confirmed that child benefit would be cut for many higher earners while the state pension age would be raised to 66.

But there was immediate gloom for the government as official data showed that British shoppers were slow to spend in September and retail sales fell unexpectedly, by 0.2 percent from the level in August.

"September's retail sales figures provide yet more evidence to suggest that consumers are starting to rein in their expenditure even before the fiscal squeeze has begun," said Samuel Tombs, an analyst at Capital Economics.

© 2010 AFP

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