Osborne Cuts to Eliminate 500,000 Jobs in U.K., Tax Banks, Curb Debt Costs

Oct. 20 (Bloomberg) -- Chancellor of the Exchequer George Osborne detailed the deepest budget cuts ever in Britain, eliminating almost 500,000 public-sector jobs and imposing a levy on banks to extract the “maximum sustainable” revenue.

“Today’s the day when Britain steps back from the brink,” Osborne told lawmakers in the House of Commons in London today as he outlined plans to virtually eliminate a 156 billion-pound ($245 billion) budget deficit. It’s “a day of rebuilding when we set out a four-year plan to put our public services and welfare state on a sustainable footing.”

At stake is Britain’s top credit rating, a fragile recovery from its longest recession on record and the future shape of the postwar welfare state. Investors said they’re concerned Osborne, 39, the youngest chancellor since 1886, will have difficulty delivering on the promises, which include a cut of 7 billion pounds from the welfare bill.

By reducing departmental spending by an average of 19 percent instead of the 25 percent he first estimated, Osborne relied more on trimming welfare, Hetal Mehta, an economist at Daiwa Capital Markets Europe Ltd. and a former U.K. Treasury official said. “Unlike more easily identifiable spending cuts such as a naval ship or a new school, reducing welfare payments is traditionally more difficult to both achieve and forecast.”

The plans would reduce public spending by 81 billion pounds after inflation, narrowing a deficit that the government forecasts at 10.1 percent of gross domestic product this year to 2.1 percent in the 2014-15 fiscal year. Debt interest costs would fall by more than 5 billion pounds by 2015.

http://noir.bloomberg.com/apps/news?pid=20601087&sid=aQ_YRFHxFP0g&pos=9

I can hear Goldman Sachs leaving the UK...

 

It's refreshing to hear a country actually doing the fiscally responsible thing these days.