News posted by www.newsinfoline.com
Britain's new coalition government will next Monday outline six billion pounds ($8.75 billion) of spending cuts this year ahead of its first budget on June 22, finance minister George Osborne said on Monday.Osborne, launching a fiscal watchdog to ensure the new Conservative-Liberal Democrat government is held to account on tackling the record budget deficit, said most of the 2010 savings would be used to reduce borrowing and some would be reallocated to support the job market."Deficit reduction and continuing to ensure the economic recovery is the most urgent issue facing Britain," Osborne told reporters. "We understand that and we need to get moving."The previous Labour government had warned cutting spending this year could derail Britain's economic recovery but Osborne said he has the support of the Treasury and the Bank of England.Britain's budget deficit is running at close to 12 percent of GDP, a similar level to that of crisis-hit Greece, and the new government has said bringing it down is a priority in order to avoid another economic crisis."Greece is a reminder of what will happen if governments lack the will to act decisively and quickly," Osborne said.The new independent Office for Budget Responsibility will be headed by former Bank of England policymaker Alan Budd and will publish fiscal forecasts and recommendations, under plans made by the Conservative Party before this month's election.Attempts by Labour, in power for 13 years until May, to build confidence around its budgets and forecasts failed to impress most economists but Osborne hopes his creation will help to reassure debt-wary markets that Britain is in safe hands."The OBR will increase crediblity on forecasts," said Carl Emmerson, deputy director at the independent Institute for Fiscal Studies."When the Chancellor (finance minister) is producing his own forecasts there is clearly a concern that him or her might be tempted to make them look a little rosier than the true picture and that temptation has now been removed," he told Reuters.EMERGENCY BUDGETOsborne, who became Britain's youngest chancellor of the exchequer or finance minister in 120 years last week, will deliver his emergency budget next month after the OBR has published its first projections.While six billion pounds of cuts will make only a small dent in the forecast 163 billion pound 2010/11 deficit, much steeper reduction is expected in years to come as the economy recovers, with government spending seen as the area most ripe for action."The main burden of deficit reduction should be done by reduced spending," said Liberal Democrat Chief Secretary to the Treasury David Laws. "What we have not done is tied ourselves into an absolutely rigid formula."The OBR will be expected to publish its forecasts at least twice a year around the time of the budget and pre-budget report, based on existing government policy at the time.And it will also have to come up with a recommendation for the amount of net fiscal tightening or loosening it judges necessary for the government's targets to be attained.While the government would not have to follow that recommendation, the finance minister would have to explain its reasons to parliament if it chose not to do so.Treasury officials have been working hard over the last month during the election campaign to identify possible cuts.Officials said that Laws, who is Osborne's deputy at the Treasury, will meet ministerial colleagues this week to agree on the 6 billion pounds of spending cuts this year, following advice from the Treasury and the Bank of England.(Editing by Jason Webb)
News posted by www.newsinfoline.com
Click here to read more news from www.newsinfoline.com
Please follow our blogs
newsinfolinephotogallery
prabugallery
newsinfolinephotogallery1
photogallery1
No comments:
Post a Comment