Experts warn that the move can jeopardise the fragile recovery from one of the worst recessions of modern times
In a high-risk strategy, Britain's new government on Monday announced swingeing public spending cuts amounting to more than £6 billion to reduce the whopping budget deficit even as experts warned that such a move at this stage could jeopardise the fragile recovery from one of the worst recessions of modern times and spark double-dip recession.
The Tory Chancellor of the Exchequer George Osborne, however, insisted that it was essential to start tackling the £156 billion deficit immediately in order to maintain the recovery and to send out a message that Britain could live within means.
He warned that it was just the beginning of a ‘new era' of austerity and more cuts would follow.
“Our huge public debts threatened financial stability and if left unchecked would derail the economic recovery. We need to take urgent action to… boost confidence in the economy, and protect jobs to show the world we can live within our means,'' he said.
The cuts were also defended by the Liberal Democrats though they had opposed them during the election campaign. The Lib Dem Chief Secretary to the Treasury David Law claimed that previously his party had not been fully aware of the true state of the economy.
“The years of public sector plenty are over, but the more decisively we act the quicker and stronger we can come through these tough times,'' he said echoing his Tory boss.
Thousands of jobs are likely to go as a result of the proposed freeze on recruitment across government departments and the wider public sector, though the official line was that the bulk of the savings would come from not filling up vacant posts.
There would also be curbs on civil servants' perks and on ‘discretionary spending'' such as consultancies and advertising. Many non-governmental bodies would be culled. All major departments have been ordered to stump up savings. Labour attacked the plans. Shadow Chancellor Alistair Darling demanded details of the proposed cuts.
“Today George Osborne wouldn't say how many jobs this package would cost. But it is already clear that these cuts will seriously affect support for business, mean less jobs for young people, and hit student places (in universities),'' he said.