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Britain slashes public spending for election year

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(Globalpost/GlobalPost)

Finance minister George Osborne on Wednesday unveiled plans to further slash British public spending as the government clings to austerity, despite a pledge to also boost investment of railways and roads.

Osborne, a key Conservative member of a coalition administration alongside junior partners the Liberal Democrats, vowed "no let up" in his deficit-slashing reforms presented before parliament.

Chancellor of the Exchequer Osborne said the government would cut spending by £11.5 billion ($17.7 billion, 13.6 billion euros) for the 2015/2016 financial year, which largely follows Britain's next general election.

"The action we have taken together with the British people has ... taken our economy back from the brink of bankruptcy," he said in reference to austerity measures implemented since taking office in 2010.

"Britain is moving out of intensive care and from rescue to recovery... Today we announce the latest action to secure the recovery."

The opposition Labour party has already pledged to stick to the coalition's spending plans, should it win national polls in May 2015.

Osborne on Wednesday added that Britain needed to act to combat the impact of "challenges from abroad" like the eurozone crisis and high oil prices.

The government will gain £5.0 billion -- almost half of the total cuts -- via a new efficiency drive across the civil service, he revealed.

"We have been... driving down costs, renegotiating contracts and reducing the size of government," Osborne told parliament.

Public sector pay increases will be capped at one percent for 2015/16.

And automatic progression pay -- whereby millions of public sector workers receive automatic annual pay increases for time served in addition to inflation-linked rises -- will be scrapped.

Osborne described the system as "deeply unfair" to those in the private sector who pay for them. But he added that government expenditure on health, schools and foreign aid would be protected in 2015/16.

A range of other government departments would meanwhile face average cutbacks of between eight and ten percent during the future financial year, which runs from April to March.

And Osborne said that welfare benefit claimants who did not speak English would be compelled to attend language courses. Claimants who are not prepared to learn English would have their benefits cut.

"This is a reasonable requirement in this country. It will help people find work," Osborne said.

The review -- or Spending Round 2013 -- set out how Britain will spend a total of £740 billion of taxpayers' cash in 2015/2016.

Britain's free-to-all National Health Service (NHS) budget will stand at £110 billion in the year.

"We need to find another £11.5 billion of further savings" across all government departments, Osborne added.

"Finding savings on this scale has not been easy -- these are difficult decisions. There never was an easy way to bring spending under control," he said.

The coalition would meanwhile stick to a path of austerity despite the country's fragile economic recovery.

"We will not let up. I will not let that happen. The reform will continue," Osborne told lawmakers, vowing to continue to slash the record deficit inherited from Labour in 2010.

"We have always believed that the deficit mattered... that we needed to take tough decisions to deal with our debts."

The chancellor added that state borrowing was due to fall to £108 billion in the current 2013/2014 financial year.

Osborne added that he would also use the new savings to invest £50 billion in education, science, roads and railways -- which do not form part of the government's day-to-day spending -- in 2015/16.

Britain's economy returned to growth in the first quarter of this year, with gross domestic product expansion of 0.3 percent according to the latest official data. In doing so, the country avoided its third recession since the 2008 global financial crisis.

The International Monetary Fund has declared that Britain was "a long way" from a sustainable economic recovery, and called last month for greater infrastructure spending to accelerate growth and offset austerity.

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http://www.globalpost.com/dispatch/news/afp/130626/britain-slashes-public-spending-election-year