British economy ‘out of intensive care’

LONDON, United Kingdom – Finance minister George Osborne on Sunday, June 23, said the British economy was “out of intensive care” but that government would stick to a path of deep cuts to public spending, as he prepared to announce a fresh round of austerity.

The chancellor of the exchequer, who will deliver his spending review on Wednesday, June 26, is expected to spell out £11.5 billion ($17.7 billion, 13.5 billion euros) of cuts to kick in following the planned May 2015 general election after reaching budget agreements with government ministries.

The Ministry of Defense reached a deal after being assured that, despite further civilian job cuts, there would be “no reduction in military capacity,” Osborne revealed on Sunday.

Osborne belongs to Prime Minister David Cameron’s Conservative party, which shares power with junior coalition partner the Liberal Democrats.

“I think we can turn this country around but we have got to stick at the plan…. We have got to stick at the economic plan that is reducing our debts, making our businesses more competitive, helping to create jobs, making sure Britain can win the global race,” he told BBC television.

Although the economy was “out of intensive care” there “certainly is the chance for a relapse” if measures to bring down the deficit were abandoned, he added.

Ed Balls, economy spokesman for the main opposition Labour Party, said Sunday Labour would likely stick to Osborne’s plans on day-to-day spending for 2015-16 if it won at the national polls in two years’ time. But he said Labour could increase spending on capital projects such as railways should it return to power.

Besides the spending reductions, including to military office staff, Osborne was set to announce plans to use the savings to invest in education, science, roads and railways.

Osborne has come under pressure to invest in capital projects to help the fragile recovery.

Britain borrowed less than expected in May owing to one-off factors, official data showed on Friday, boosting Osborne ahead of the spending review.

Public sector net borrowing, a measure of the public deficit, stood at £8.8 billion in May, the Office for National Statistics said. – Rappler.com