THURSDAY, OCTOBER 21, 2010


KLMNO Britain moves to slash budget deficit budget from A1


BrownandTonyBlair. Intheaftermathof thefinancial


crisis — with collapsing tax reve- nue and soaring stimulus spend- ing—thebudgetdeficithereisone of thehighest intheindustrialized world, standing at 11.5 percent of economic output, slightly higher thanintheUnitedStates. Now,budgetcutsareset toyank


billions out of the British econo- my, costing jobs that may not be offset by the private sector and potentially stalling the still-fragile economic recovery. The move in Britain comes as


nations across Europe are rolling back government spending ramped up after the financial cri- sis, overhauling even long-sacred social safety nets in the drive for fiscalausterity. Inparticular, cash- strapped Spain, Ireland and Greece, which needed an interna- tional bailout, aremaking cuts to convince investors they can still pay their bills, touching off in- creasingly violent strikes from unionists. On Wednesday in France, for


instance, angry protesters op- posed to government efforts to boost the retirement age clashed withbaton-wieldingpolice,block- ing roads, smashing storefront windows and ring-fencing gas de- pots. In recent weeks,more limit- ed strikes have temporarily shut down London’s Underground transit system, strandingmillions ofpassengers. Nevertheless, British officials


have decided that a potential loss of market confidence and the weightof thedebtonthe economy andtheBritishpoundarenowthe greater threat. “Today is the day when Britain


steps back from the brink, when we confront thebillsofadecadeof debt,” George Osborne, the chan- cellorof theexchequer,orBritain’s treasury secretary, declared be- foreParliament onWednesday. The effort here is set to trans-


formthe Britishwelfare state, set- ting new limits on benefits for the poor and raising the retirement age formillions of Britons. Fewer police officers will soon be on the streets, andtrainfares andcollege tuitionswill rise.Onein12govern- ment employees is set to lose their job. Yet the British, unlike their


peers in continental Europe, ap- pear culturally more willing to cope with what Cameron has dubbed a new “age of austerity,” withpollsshowingalmost twiceas many Britons supporting deep debt reductionas opposing it. In announcing the long-antici-


patedcutsWednesday, thegovern- ment portrayed its campaign as fair to the poor, arguing that the wealthy, through new taxes and benefit cuts, will proportionally shouldermore of the burden. But critics and leading think tanks have accused the government of being duplicitous, saying that women and the poor,who depend more on public services, are set to bear the brunt of thepain. As previously promised, the


government announced that it would present legislation for a permanent levy on large banks, calling it an insurance policy against another financial crisis. The venerable BBC – Britain’s state-funded television, radio and Internet media giant — is set to sustain withering cuts of more than 16 percent of its budget,with evensteeper reductions ingovern- ment funding for the arts, includ- ing London museums and the- aters. And as Britain moves to close


costlyprisons, thehard-hit Justice Ministrysaiditwouldemploynew rehabilitation tactics to cut the number of criminals behind bars forminor crimes. Rodney Barker, a professor of


government at theLondonSchool of Economics and Political Sci- ence, said Britain was unlikely to face crippling industrial strikes like the ones that erupted during Thatcher’s crusade to shrink gov- ernment and break the unions in the 1980s. “Most trade unionists realize


thatold-fashionedprotest iscoun- terproductive,”Barker said. But he warned of a current of


publicanger spreadingfromother groups, including middle-class families and single parents hit by the government’s decision to scrap child benefits for anyone earningmore than$70,000a year. A far greater risk, economists


say, is thatBritainmight finditself in a situation similar to that in neighboring Ireland, where a year-old attempt to impose deep budget cuts has quashed consum- er sentiment and plunged the economy back into negative terri- tory. “Thegovernment is takingabig


gamble,” said Paola Subacchi, an international economics expert at Chatham House, a London-based think tank. “It is asking thenation to tighten its belts for a number of years inorder tofindanewpathto prosperity. But if you don’t get it right, youmight implode growth, andit’s adisaster.”


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In the United States, officials


have also signaled a desire to trim the deficit. FederalReserve Chair- man Ben S. Bernankewarned this month that it was “crucially im- portant” to “put U.S. fiscal policy on a sustainable path.” A biparti- san commission is set to deliver recommendations in December onhowto cut thedeficit. But the process inWashington


ismoving far slower than in Lon- don, in part because of deep con- cerns that cutting too much too sooncoulddamagethestill-fragile


U.S. recovery. Asked about the gap,MarkHo-


ban, Britain’s financial secretary to theTreasury, toldTheWashing- ton Post: “We have made our choice. I have to leave it to the Americans to decide in the mid- term elections whether [the Obama administration’s] policy is right.”


faiolaa@washpost.com


Special correspondentRebecca Omonira-Oyekanmi contributed to this report.


LEON NEAL/AGENCE FRANCE-PRESSE VIA GETTY IMAGES Demonstrators in London march toward Downing Street to protest government spending cuts.


EZ SU


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