Britain to unveil plans to cut record deficit

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Britain's new coalition government unveiled some 6.2 billion pounds (7.2 billion euros, 8.9 billion) in cuts of "wasteful" public sector spending Monday to slash a record deficit.

Amid warnings about an "age of austerity", the Conservative-Liberal Democrat administration detailed where the axe is set to fall and unveiled proposals to raise more revenue for the country's empty coffers.

"In the space of just one week we have found and agreed to cut 6.25 billion pounds of wasteful spending across the public sector," said finance minister George Osborne.

Official data released on Friday showed that the deficit had hit 156.1 billion pounds in 2009/2010, or 11.1 percent of gross domestic product (GDP).

That was lower than the previous estimate of 163.4 billion pounds -- but still a record high level.

"We inherited a terrible economic situation and we are going to put it right," said Osborne, who will also present an emergency budget on June 22 to address the dire state of public finances.

The Chancellor of the Exchequer added that the Greek crisis highlighted the need to act fast amid deepening financial market concerns about high public deficit levels in the eurozone.

"My job is to make sure that this country can live within its means because we have inherited the largest budget deficit in Europe as an incoming government," Osborne told the BBC.

"We can see from countries like Greece what happens if you as a nation don't show you can live within your means."

British Prime Minister David Cameron indicated over the weekend that the most vulnerable in society would be protected from the impending cuts.

But Deputy Prime Minister Nick Clegg gave efforts to reduce the debt an added sense of urgency on Sunday, suggesting that the speed at which the eurozone crisis had developed meant Britain could no longer hold off making cuts.

The Sunday Times reported that the Department for Business, Innovation and Skills would bear the brunt of the initial cuts, making savings of 900 million pounds.

It added that the coalition plans to save 513 million pounds by slashing the budgets of advisory bodies and abolishing others, while civil servants' perks such as taxis, flights and hotel accommodation are also targets.

The coalition of Cameron's Conservative party and Clegg's Liberal Democrats could also end up cutting between 300,000 and 700,000 public sector jobs over the coming years, the weekly broadsheet added.

The government also plans to secure 8.0 billion pounds via a special tax on banks, according to The Independent on Sunday.

The paper said the figure is nearly three times higher than originally planned by Osborne.

Ahead of the country's general election earlier this month, Clegg had publicly opposed plans by the Conservatives to cut public spending this year by 6.0 billion pounds -- saying it was too much, too soon.

But on Sunday, he warned of hard times ahead and revealed the escalating eurozone crisis had persuaded him it was right to start making cuts immediately.

Britain's public finances have been ravaged by a record-length recession that has slashed tax revenues and ramped up expenditure, as well as by enormously expensive banking-sector bailouts.

© 2010 AFP

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