More spending cuts for Britain, but austerity pill is sugared

Wed Jun 26, 2013 11:04am EDT
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By William James

LONDON (Reuters) - British finance minister George Osborne unveiled spending cuts on Wednesday to try to tame the country's big public deficit, but promised to reinvest some of the money saved to counter criticism of excessive austerity.

In a speech to parliament, interrupted by jibes from opposition Labour party lawmakers, Osborne spelled out 11.5 billion pounds ($17.8 billion) in cuts for the 2015/16 fiscal year, including steps to trim the welfare budget.

Tens of thousands of British pensioners living abroad in warm climates and unemployed foreign jobseekers in Britain unable to speak English are among those who stand to lose out.

Osborne said the budgets of the justice ministry and local government department had been cut by a nominal 10 percent, but said the government planned to spend 3 billion pounds on affordable housing projects.

The debate over the cuts, which will take effect just weeks before the general election in 2015, draws the battle lines for that vote as Labour and the ruling Conservatives try to prove their economic credentials to the public.

"While recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care - and from rescue to recovery," Osborne told parliament.

The Conservatives say they inherited the biggest peacetime deficit from Labour when they came to power in 2010 and have cut it by a third. Their favorite line of attack is that Labour can never be trusted to manage the economy again.

But Labour accuses Prime Minister David Cameron's government of pushing through too many cuts too quickly, a tactic it says is stifling growth and delaying a recovery.   Continued...

Britain's Chancellor of the Exchequer George Osborne and Chief Secretary to the Treasury Danny Alexander leave the Treasury for the House of Commons where the Chancellor will deliver this year's spending review in London June 26, 2013. REUTERS/Stefan Rousseau/POOL