The new UK coalition government announced today that it would focus on reducing the record deficit running at 11% GDP as a priority during their elected term.
“The deficit reduction programme takes precedence over any of the other measures in this agreement, and the speed of implementation of any measures that have a cost to the public finances will depend on decisions to be made in the Comprehensive Spending Review. We will significantly accelerate the reduction of the structural deficit over the course of a parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes.”
Chancellor George Osborne, who has announced an emergency budget for June 22nd, said he would outline plans on Monday for an initial £6 billion’s worth of cuts.
The coalition has plans to cut Ministry of Defence spending by 25%, while proposing private capital investment in the Royal Mail.
The Accord supports the introduction of a banking levy and the reduction of the bonus culture in the finance sector. Meanwhile it will be interesting to see if the coalition can succeed where the Labour government failed, in getting banks to lend money to businesses.
“There is an urgent priority that is getting lending going to small- and medium-sized businesses. That is an absolute urgent priority,” said Osborne.
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