Saturday, June 29, 2013

 

London:More cuts needed to balance United Kingdom budget:experts

George osborne hi.jpgLONDON, June 28 - Despite spending cuts of 11.5 billion pounds (17.4 billion U.S. dollars) announced by British Chancellor George Osborne for 2015-16, a leading think-tank believes it will not be enough to balance government budgets in the medium term.


The Institute for Fiscal Studies's (IFS) deputy director Carl Emmerson told press on Friday that further consolidation would be needed to get borrowing back down to a sustainable level.

"If those forecasts prove correct further spending cuts or tax rises to the tune of 25 billion pounds by 2017-18 would be required," he added.

The latest round of cuts to balance the budget were not envisaged by Chancellor Osborne when he unveiled his first budget in 2010.

However, lacklustre growth has meant his plans have been blown off course.

IFS director Paul Johnson added that radical changes to the level and composition of public spending would continue.

"An announcement that 144,000 public sector jobs would go in one year as part of a program that could see one million jobs lost by 2017-18 would have created a storm normally. But not now.

We seem almost to have got used to this level of austerity," he said.

Recent cuts have hit local government, justice and environment while protect health, pensions and schools. Emmerson said this was not a break from the norm of previous governments.

He added, "The ring-fencing for schools and health looks important but a real-terms freeze for the NHS is still pretty challenging."

However, the experts warned the ring fences would have to be looked at to continue cutting overall spending.

Chancellor Osborne's unveiling of spending cuts had been followed by an announcement by the Chief Secretary to the Treasury Danny Alexander of capital investment plans for 100 billion pounds worth of investment in infrastructure up to 2021.

Most of these capital investments take place after 2015-16.

"The spending round and the announcements after the spending round did not increase capital spending compared to what we already knew about or indeed compared to what we are currently spending on investment," said Emmerson.

However, the spending plans came against a recent history of cuts in capital spending, and thus marked a change in course.

Overall, the experts said future polices will continue to stay the course.

 "It (the budget) is not a step up in investment spending, it is maintaining investment at the same level but it does still mean investing in new railways and road and so on," Emmerson said.


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