News / Europe

Britain Makes Huge Cuts to Avert Debt Crisis

Multimedia

Audio
Henry Ridgwell

Britain's new coalition government has passed an emergency budget after warning the state of the country's finances is much worse than anticipated.

The Clapham Park Estate was once voted one of the worst social housing developments in London.  The window frames are crumbling, the apartments are dark and damp and the estate suffers from high levels of crime, drug use and unemployment.  Many of the residents are reliant on state handouts to get by.  It is places like this that could be hit hardest by cuts in housing and social benefit.

The apartment blocks were due to be demolished and rebuilt, but the money has run out.  Vernon de Maynard is chair of the local residents' association.

"We are asking when we are going to get decent homes," he said.  "They tell us 2016, or 2017 plus ... so again it is the little person at the bottom of the scale who gets it in the neck."

Britain's new chancellor, George Osborne of the Conservative Party, claims the previous Labor Party administration took the country to the edge of bankruptcy.

In an emergency budget he outlined, public spending will be slashed by one quarter over five years, heralding widespread job losses in the public sector and cuts to Britain's welfare state. 

The new budget has been met with angry protests.

"Eighty percent, four-fifths of dealing with this deficit that we are now in, through the bankers and all the problems that they caused, is to be borne by public services workers and the services that they provide," said Dave Prentis general secretary of the public service union, 'Unison'.

Britain's government spent more than $1.25 trillion on bailing out banks following the economic crisis.  It has helped push the deficit in Britain to more than 11 percent of GDP, one of the highest debts in Europe.

The government says Britain, like Greece or Spain, is in danger of losing its triple-A credit rating, so it is slashing spending to balance the books.

Susan Anderson from the Confederation of British Industry, which represents private businesses, says the government is right to take drastic action.

"The U.K. is facing a considerable period of austerity," said Anderson.  "We have got one of the highest deficits in the OECD, we know we need to take action.  We think the government has taken the right balance between cutting public spending and some tax increases."

With its own sterling currency, Britain has been able to keep the euro currency crisis at arm's length.  But Europe is Britain's biggest trading partner, and any problems there hit the British economy.

Economics Professor Wendy Carlin, of University College London, says there is a further risk that simultaneous cuts across the continent will make things worse.

"The problem is if all the big countries in Europe cut spending at the same time it is very difficult to see where the extra sources of demand are going to come from to sustain growth," said Carlin.

Just a mile from the bustle of London's financial district lies Borough Market.  Among the pricey food and drink stalls, Michele Marconi arranges the exotic blooms at her flower shop, Chez Michele.  They are the type of luxury item that are vulnerable in a downturn, and which now face an increase in sales tax to 20 percent.  Michele takes a philosophical viewpoint.

"In my position I cannot do a lot, I just have to follow what happens," said Marconi.  "They are probably going to buy less flowers, but I think if you still maintain quality your customers will always come back."

Such optimism is reflected in the general public.  A recent poll showed 59 percent of British people support the government's spending cuts.  Its message about the danger of the debt appears to be getting through.

But the full effects of the cuts will only be felt in the coming years.  More protests like this seem certain as British society faces it biggest transformation in a generation.

Britain's new coalition government has passed an emergency budget after warning the state of the country's finances is much worse than anticipated.

The Clapham Park Estate was once voted one of the worst social housing developments in London. The window frames are crumbling, the apartments are dark and damp and the estate suffers from high levels of crime, drug use and unemployment. Many of the residents are reliant on state handouts to get by. It is places like this that could be hit hardest by cuts in housing and social benefit.

The apartment blocks were due to be demolished and rebuilt, but the money has run out. Vernon de Maynard is chair of the local residents' association.

"We are asking when we are going to get decent homes," he said. "They tell us 2016, or 2017 plus ... so again it is the little person at the bottom of the scale who gets it in the neck."

Britain's new chancellor, George Osborne of the Conservative Party, claims the previous Labor Party administration took the country to the edge of bankruptcy.

In an emergency budget he outlined, public spending will be slashed by one quarter over five years, heralding widespread job losses in the public sector and cuts to Britain's welfare state.

The new budget has been met with angry protests.

The general secretary of the public service union, 'Unison', is Dave Prentis.

"Eighty percent, four-fifths of dealing with this deficit that we are now in, through the bankers and all the problems that they caused, is to be borne by public services workers and the services that they provide," said Prentis.

Britain's government spent more than $1.25 trillion on bailing out banks following the economic crisis. It has helped push the deficit in Britain to more than 11 percent of GDP, one of the highest debts in Europe.

The government says Britain, like Greece or Spain, is in danger of losing its triple-A credit rating, so it is slashing spending to balance the books.

Susan Anderson from the Confederation of British Industry, which represents private businesses, says the government is right to take drastic action.

"The U.K. is facing a considerable period of austerity," said Anderson. "We have got one of the highest deficits in the OECD, we know we need to take action. We think the government has taken the right balance between cutting public spending and some tax increases."

With its own sterling currency, Britain has been able to keep the euro currency crisis at arm's length. But Europe is Britain's biggest trading partner, and any problems there hit the British economy.

Economics Professor Wendy Carlin, of University College London, says there is a further risk that simultaneous cuts across the continent will make things worse.

"The problem is if all the big countries in Europe cut spending at the same time it is very difficult to see where the extra sources of demand are going to come from to sustain growth," said Carlin.

Just a mile from the bustle of London's financial district lies Borough Market. Among the pricey food and drink stalls, Michele Marconi arranges the exotic blooms at her flower shop, Chez Michele. They are the type of luxury item that are vulnerable in a downturn, and which now face an increase in sales tax to 20 percent. Michele takes a philosophical viewpoint.

"In my position I cannot do a lot, I just have to follow what happens," said Marconi. "They are probably going to buy less flowers, but I think if you still maintain quality your customers will always come back."

Such optimism is reflected in the general public. A recent poll showed 59 percent of British people support the government's spending cuts. Its message about the danger of the debt appears to be getting through.

But the full effects of the cuts will only be felt in the coming years. More protests like this seem certain as British society faces it biggest transformation in a generation.

You May Like

Lebanese Media Unite to Support Palestinians in Gaza

Joint newscast billed as Arab world’s first unified news bulletin in support of Hamas-controlled Gaza Strip More

Photogallery Australian PM Alleges ‘Coverup’ at MH17 Crash Site

Meanwhile, Russia's ambassador to Malaysia denies plane's black boxes were opened before they were handed over to Malaysian officials More

Despite Advances in AIDS Treatment, Stigma Lingers

Leading immunologist tells VOA that stigma is often what prevents those infected with disease from seeking treatment More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
IAEA: Iran Turns its Enriched Uranium Into Less Harmful Formi
X
July 22, 2014 10:26 AM
Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

AppleAndroid