Austerity plan brings UK 'back from the brink'

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Austerity plan brings UK 'back from the brink'

Austerity plan brings UK 'back from the brink'
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The impact of the British austerity plan will spread beyond the UK’s shores.

The BBC World Service faces potential cuts as the government will no longer pay the annual cost of more than 300 million euros. Instead the corporation itself will have to find the cash at a time when its own income is being cut in real terms.

Several government ministries will feel the pinch from the Chancellor’s drastic squeeze on spending.

Their budgets will be slashed by almost a fifth on average over the next five years. Over the same period nearly half a million public sector jobs – nearly one in ten – will disappear, mostly by posts not being replaced when people leave.

The plan has been described as the most severe among the EU’s larger countries. Aimed at bringing the country “back from the brink” in the Chancellor’s words, for the opposition it has been thrown together too fast.

The idea is to bring the public deficit tumbling down over the next five years. A government official said it was not only about saving money; it would transform the way government works.

Most of the measures will be felt in the form of spending cuts – while at least a quarter will come from tax rises.

The state pension age will rise to 66 for both men and women by 2020 – six years earlier than planned. By reforming public sector pensions, the government hopes to save two billion euros by 2015, with employees likely to contribute more.

Welfare spending is also to be cut by a further 8 billion euros, on top of the 12 billion already announced earlier this year.

Local government spending is to be reduced by more than seven percent – and although there is some protection for social housing, it is not known exactly where the axe will fall.

The same uncertainty faces public transport, due to be cut by a fifth over four years.

As expected, higher education will be hit hard – university teaching budgets are to be cut by 40%, but mostly in humanities while science and maths are relatively protected.

The Chancellor says the budget for schools though will rise, from 39 billion to 44 billion euros over the next four years.

The budget for energy and climate change is being reduced, by five percent over the next few years. But more money will be allocated for flood protection, and there will be significant investment in wind power.

Other areas too have been spared. The National Health Service will get a 1.3% rise in its funding in real terms by 2015, in line with an election promise by David Cameron.

The overseas aid budget is also to be protected from cuts, to meet a commitment to UN targets.