Britain Outlines Near $12 Bln in Cuts

Monday, 24 May 2010 08:28 AM

 

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LONDON — Britain’s new finance chief said Monday that the government would push through £6 billion in spending cuts in an attempt to convince skittery financial markets that Prime Minister David Cameron’s policy team is committed to paring high levels of public outlays.

For the Chancellor of the Exchequer George Osborne, who has long pushed the Tory party to adopt an aggressive deficit-cutting strategy, the menu of restrictions, freezes and spending reversals is a first bid to convince a still uncertain public that Britain needs to be in tune with the budget-cutting in Greece, Portugal, Spain and other parts of Europe.

“The years of public sector plenty are over,” he said. “The more decisively we act, the more quickly we can come through these tough times.”

Despite fears of provoking a double-dip recession, Mr. Osborne said even the governor of the Bank of England agreed “that the greatest risk to the recovery was not showing the world that we could live within our means.”

More economists are coming around to the idea that aggressive and well-signaled spending cuts can in fact spur an economic recovery by keeping interest rates low and financial confidence high — a view that counters the more Keynsian approach pushed by former Prime Minister Gordon Brown, which argues that such a pull back would derail a still-weak economic recovery.

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