UK latest EU state to impose broad cuts

THE BRITISH government has become the latest EU country to impose spending cutbacks yesterday, with the announcement that £6 billion will be cut this year, and tens of billions more in coming years.

The need for cutbacks has been given “greater urgency”, said British chancellor of the exchequer George Osborne, because of the crisis facing the euro and financial markets’ growing doubts about Greek sovereign debt.

Meanwhile, the International Monetary Fund has warned Spain, which imposed a €15 billion austerity package last week that included pay cuts for state workers, that it must do much more to reform its economy.

German finance minister Wolfgang Schauble said Germany would cut spending by €10 billion each year until 2016, threatening hopes in other EU countries that Germany could drive economic growth.

EU leaders, including Taoiseach Brian Cowen, are to debate measures to strengthen EU-wide “economic governance” when they meet in Brussels at next month’s quarterly summit meeting.

European Commission president José Manuel Barroso said EU states must better co-ordinate economic policies to stabilise the euro: “We must do something about the imbalances in competitiveness in Europe.”

Mr Barroso added: “We must better co-ordinate our economic policy, otherwise we will not be able to stabilise the single currency. We do not want to make Germany less competitive. Other member states must become more competitive.”

Under yesterday’s British plan, nearly £2 billion has been cut from local authorities’ budget; £1 billion from consultants and marketing and advertising spending, while nearly £2 billion of projects are to be delayed or scrapped.

The chief secretary to the treasury David Laws said yesterday’s cuts had been “done with a scalpel, not a chainsaw”, but he warned that tougher measures are to come in next month’s budget and a full spending review later this year.

The cuts, opposed by trades union leaders, could cost 50,000 public service jobs this year alone, amid fears that up to half a million public sector jobs – out of nearly six million employed by the state – could be shed over the next five years.

The first cutbacks will cost Northern Ireland £128 million, although some can be deferred until next year by the NI Executive, which is also having to find ways of cutting £400 million, following decisions by the former Labour government.

The scale of the troubles affecting the UK’s devolved administrations was highlighted by the fact that the cuts were announced as First Minister Peter Robinson and Martin McGuinness met their Scottish and Welsh counterparts in Belfast.

Speaking after the Stormont meeting with Scottish first minister Alex Salmond and Welsh first minister Carwyn Jones, the North’s Deputy First Minister Martin McGuinness said: “Our administrations know and understand that we are facing very difficult times ahead.”