George Osborne looking to Canada

David Cameron and George Osborne

David Cameron and George Osborne

Coalition government in UK faced herself with major financial and budget problems as they took the power last month. Prime Minister David Cameron said this week that Britain’s financial situation was even worst then they thought; in his word country will be in years of pain to bring the enormous deficit of £156bn under control.

PM’s bleak prognosis came as part of preparations for emergency post-election budget which will be revealed on June 22nd, on a same day Chancellor George Osborne will set out overall level of budget spending cuts that will apply from next spring.

Osborne’s framework for that budget and the subsequent autumn spending will outline the spending cuts of each individual department. Previously PM Cameron informed public and his colleagues in the Cabinet that all government departments are obligated to prepare and present their own cuts plan in amount of 20% or more; as it is supposed Chancellor Osborne will be judge in this process and further actions will depend on his verdict. The Independent tried to explain government future actions on a budget cuts this week.

“The Government plan to emulate the success of Canada, which eradicated a similar deficit in the mid-1990’s, said the FT, but it faces a much harder task. Canada was acting in the context of a global boom. What’s more, its electorate was prepared: polls showed that 80% of Canadian were worried about their fiscal deficit in the early 1990’s. By contrast, British voters still don’t realise how serious things are: few people backed even the merge £6bn cuts announced for 2010-11”, said The Independent

Chancellor Osborne’s plan is to target welfare payments, middle-class tax breaks and public-sector pensions; during the summer he will held a series of meetings with members of the public, think tanks, voluntary groups and other parties affected by his plan hoping that they will help him to find more ways to identify possible savings.

In same paper Sean O’Grady writes that if government will follow Canadian tactics from mid-1990’s that will lead to the loss of about a million public-sector jobs over the next five years. The Daily Telegraph’s Simon Heffer said that coalition government assumes that they will be able to identify cuts and have the nerve to push them through.

“Canada shows that: some 40,000 public-sector workers lost their jobs under its reforms; hospitals shed nurses or even closed altogether; average class sizes rose from 25 to 35. Canada’s leaders spread their pain by making it clear that nothing was out of bounds, whereas our ruling coalition has ring-fenced health spending, as well as the aid budget, making the impact on other departments more punishing”, said Heffer.

Some commentators are convinced that if this government succeed in their cut plans and budget reform’s after five-year term they will be able to speak about the best economic conditions in living memory, not the worst as it was predicted before May’s general elections called by Labour party.


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