Business

Britain set to tighten belts

Britain's new government has unveiled a slew of spending cuts aimed at taking a small bite out of the ballooning federal deficit.

Britain's new government unveiled a slew of spending cuts Monday, aimed at taking a small bite out of the ballooning federal deficit.

Chancellor of the Exchequer George Osborne outlined the new era of fiscal restraint, much of which consists of not filling vacancies and not replacing departing workers. In total, the moves will save the government the equivalent of $9.5 billion Cdn, a drop in the bucket of its $238-billion total budget deficit.

"Countries are waking up to the dangers of a sovereign debt crisis and taking action to live within their means," Osborne said at a news conference in London. "That is what this new government is all about."

After a closely contested election two weeks ago, Osborne's Tory party leads an alliance with the Liberal Democrats. Among the first moves to prove that the new government is serious about austerity was setting up a new body to audit finances and assess efficiencies.

Among the cuts outlined Monday were $3 billion from cutbacks in IT programs, suppliers and property. Another $1 billion will be shaved from restraining recruitment and another $765 million will be saved by cutting what the government calls "low-value spending."

Osborne was careful, however, to not discuss widely anticipated tax increases, along with the spending measures.

"We inherited an economic mess, but we can come out of it stronger," Osborne said.

The new government will outline its complete budget on June 22, when it vows to eliminate "the bulk" of the British deficit over the course of the current parliamentary session.

now