crap - Greece debt level compared to GDP was 13% IIRC , British level 11.6% :wtf:
http://www.news24.com/World/News/Britain-faces-painful-cuts-20100516
London - Britain's new premier David Cameron is riding high after taking power in a "love-in" coalition tie-up - but with painful budget cuts looming, his honeymoon may come to a swift end, experts say.
Cameron, whose Conservatives are in an unlikely alliance with Nick Clegg's Liberal Democrats, has pledged an emergency budget within 50 days to tackle a deficit of £163.4bn - 11.6% of gross domestic product.
"No modern government has inherited such a difficult economic situation," said finance minister George Osborne, vowing to cut the deficit at a "significantly accelerated" rate compared to Gordon Brown's Labour.
While some experts say the new government may surf a wave of goodwill to take drastic action quickly, others warn of serious trouble ahead if the two coalition parties traditionally seen as enemies fall out.
The new team of Prime Minister Cameron and his deputy Clegg are on a journey that Azad Zangana, an economist with fund managers Schroders, compared to a ride on the "tunnel of love" at a fairground.
"If all goes well, the pair will make a nice couple by the time they come out at the other end, hopefully with public finances being returned to a sound footing," Zangana said.
"If not and if either party rocks the boat, this coalition could find itself very wet."
During the election campaign, Cameron's centre-right Conservatives repeatedly said they wanted immediate action to tackle the deficit.
Clegg's centrist Liberal Democrats wanted to give the economy more time to recover from a painful recession from which Britain only emerged at the end of last year.
The new coalition has already announced six billion pounds of "modest cuts" to public spending in 2010-11, as the Conservatives wanted, plus a spending review that will report in the last few months of the year.
But Osborne is likely to use the emergency budget to announce much more punishing reductions in coming years. There are also likely to be tax rises, although the emphasis will remain on cuts to tackle the problem.
Annual government spending cuts of £37bn will be necessary by 2013-14 if the deficit is to be halved, according to the Financial Times.
"We suspect the June budget may well contain extra fiscal tightening on top of the six-billion-pound first-year spending cuts," said Citigroup economist Michael Saunders.
"We believe any tax hikes will occur as soon as possible, in a month or two, as part of a 'kitchen sink strategy' to absorb the pain while the coalition is still in a political honeymoon and the previous government can be blamed."
While economists welcome the planned cuts, there are signs that they could trigger discontent among public sector workers and even the wider public as they start to bite.
Dave Prentis, general secretary of Britain's biggest union Unison, said the cuts would put the recovery at risk and could lead to further unemployment, with the jobless rate, at eight percent, already at its highest for 16 years.
"Plans for more cuts will follow, hitting communities hard," Prentis said.
"We will fight tooth and nail to protect our members and the vital jobs they do. I call on every member and activist, however you voted at the general election, to join us in the fight of our lives to defend our vital public services."
For the moment there are few public signs of disagreement between the Conservatives and Liberal Democrats on getting the economy back on track.
But commentators pinpoint the relationship between Osborne and Liberal Democrat Business Secretary Vince Cable as a potential source of trouble.
Cable, a 67-year-old former chief economist for oil company Shell, is one of Britain's most popular and respected politicians who built a reputation as a sage, having anticipated the global financial crisis.
He has in the past been scathing about the economic credentials of 38-year-old Osborne - who has spent virtually his whole career in politics - but the pair have now been pushed together in two of the biggest jobs in government.
It was initially thought as the coalition was being put together that Cable would be put in charge of banking reform, a subject close to his heart, but Osborne's team now stresses that his department will be in charge.
- AFP
http://www.news24.com/World/News/Britain-faces-painful-cuts-20100516
London - Britain's new premier David Cameron is riding high after taking power in a "love-in" coalition tie-up - but with painful budget cuts looming, his honeymoon may come to a swift end, experts say.
Cameron, whose Conservatives are in an unlikely alliance with Nick Clegg's Liberal Democrats, has pledged an emergency budget within 50 days to tackle a deficit of £163.4bn - 11.6% of gross domestic product.
"No modern government has inherited such a difficult economic situation," said finance minister George Osborne, vowing to cut the deficit at a "significantly accelerated" rate compared to Gordon Brown's Labour.
While some experts say the new government may surf a wave of goodwill to take drastic action quickly, others warn of serious trouble ahead if the two coalition parties traditionally seen as enemies fall out.
The new team of Prime Minister Cameron and his deputy Clegg are on a journey that Azad Zangana, an economist with fund managers Schroders, compared to a ride on the "tunnel of love" at a fairground.
"If all goes well, the pair will make a nice couple by the time they come out at the other end, hopefully with public finances being returned to a sound footing," Zangana said.
"If not and if either party rocks the boat, this coalition could find itself very wet."
During the election campaign, Cameron's centre-right Conservatives repeatedly said they wanted immediate action to tackle the deficit.
Clegg's centrist Liberal Democrats wanted to give the economy more time to recover from a painful recession from which Britain only emerged at the end of last year.
The new coalition has already announced six billion pounds of "modest cuts" to public spending in 2010-11, as the Conservatives wanted, plus a spending review that will report in the last few months of the year.
But Osborne is likely to use the emergency budget to announce much more punishing reductions in coming years. There are also likely to be tax rises, although the emphasis will remain on cuts to tackle the problem.
Annual government spending cuts of £37bn will be necessary by 2013-14 if the deficit is to be halved, according to the Financial Times.
"We suspect the June budget may well contain extra fiscal tightening on top of the six-billion-pound first-year spending cuts," said Citigroup economist Michael Saunders.
"We believe any tax hikes will occur as soon as possible, in a month or two, as part of a 'kitchen sink strategy' to absorb the pain while the coalition is still in a political honeymoon and the previous government can be blamed."
While economists welcome the planned cuts, there are signs that they could trigger discontent among public sector workers and even the wider public as they start to bite.
Dave Prentis, general secretary of Britain's biggest union Unison, said the cuts would put the recovery at risk and could lead to further unemployment, with the jobless rate, at eight percent, already at its highest for 16 years.
"Plans for more cuts will follow, hitting communities hard," Prentis said.
"We will fight tooth and nail to protect our members and the vital jobs they do. I call on every member and activist, however you voted at the general election, to join us in the fight of our lives to defend our vital public services."
For the moment there are few public signs of disagreement between the Conservatives and Liberal Democrats on getting the economy back on track.
But commentators pinpoint the relationship between Osborne and Liberal Democrat Business Secretary Vince Cable as a potential source of trouble.
Cable, a 67-year-old former chief economist for oil company Shell, is one of Britain's most popular and respected politicians who built a reputation as a sage, having anticipated the global financial crisis.
He has in the past been scathing about the economic credentials of 38-year-old Osborne - who has spent virtually his whole career in politics - but the pair have now been pushed together in two of the biggest jobs in government.
It was initially thought as the coalition was being put together that Cable would be put in charge of banking reform, a subject close to his heart, but Osborne's team now stresses that his department will be in charge.
- AFP
