Reuters: US Dollar Report: UPDATE 1-UK to cut government budgets to boost capital spending

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UPDATE 1-UK to cut government budgets to boost capital spending Mar 19th 2013, 14:00 Tue Mar 19, 2013 10:00am EDT By Andrew Osborn LONDON, March 19 (Reuters) - Britain will trim the budgets of most government departments by 1 percent a year over the next two years to raise money for capital spending, Prime Minister David Cameron's spokesman said on Tuesday. "That will save us cumulatively almost 2.5 billion pounds ($3.8 billion) over the next two years. It is also allowing the recycling in the short term of money into capital spending, which is an important part of the government's agenda," the spokesman told reporters. He was speaking a day before the 2013-14 budget is unveiled. Faced with what the spokesman called "an unprecedented peacetime economic crisis" and having recently lost its prized top-notch AAA rating, the government is under heavy pressure to reduce the country's large budget deficit. Finance minister George Osborne is also under pressure to boost Britain's stagnant economy, and many economists believe capital spending gives more stimulus than what departments spend on a day-to-day basis. The spokesman by saying that the amount ministries are allocated by do not actually spend annually is "somewhat higher" than 6 billion pounds per year, saying any savings would be redirected to capital spending projects. He said Osborne outline how the almost 2.5 billion pounds in savings would be spent when he presents his annual budget to parliament on Wednesday. A further 1.2 billion pounds of savings from current departmental spending would also be pencilled in for 2015/16 in a forthcoming spending review, the spokesman said. The cuts would not affect ministries such as health, education and overseas aid, whose budgets are shielded from the government's austerity drive, the spokesman said. The defence ministry would also benefit from special arrangements, he added. Link this Share this Digg this Email Reprints

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