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Govt unveils huge asset sale to cut debt
2009-10-12
LONDON (AFP) - Prime Minister Gordon Brown announced on Monday a 16-billion-pound sale of state assets including a high-speed railway and a betting service to cut soaring debt caused by the economic crisis. Brown -- facing a likely election defeat next year by David Cameron's Conservative Party -- wants to halve Britain's deficit in four years. But opposition politicians derided the asset sale as a political gimmick and compared it to a "national car boot sale" and "selling the family silver." The planned disposals, which also include a 33-percent stake in European uranium consortium URENCO and the Student Loan Company. "We plan a sale of assets to deal with our debt issues and... 16 billion of assets will be sold within the next two years," Brown told financiers during a speech in central London. The public deficit increased after an expensive bailout of the troubled banking sector. The deficit is widely forecast to strike 175 billion pounds this year as the nation's finances also face pressure from a recession which has slashed taxation revenues. As well as announcing the sale, Brown's speech was also a bid to seize back the political initiative on the issue from the Conservatives, who are well ahead in the opinion polls with a general election due by June. It included a string of attacks on Conservative policies, a taste of the electioneering flavour which is likely to dominate political debates in the coming months. "Some people would withdraw the cooperation that is necessary with our European partners and the rest of the world to enable the only way that the global economy can function in the future -- the international cooperation is necessary," Brown said. "I will fight over the next few months for what I believe." Cameron says he could hold a referendum on the European Union's Lisbon Treaty reforms if he wins office and they have not been ratified by the Czech Republic, the only EU state yet to do so. Brown said there was a "fundamental divide" in British politics over how to tackle the economic problems and said the Conservatives wanted to stop quantitative easing and would fail to invest. In response, Conservative Treasury spokesman Philip Hammond called on Brown's government to start taking "tough decisions." The 16-billion-pound figure was equivalent to only a weeks' worth of borrowing at current levels, he said, adding: "Selling the family silver will not solve the crisis in public finances". Vincent Cable, Treasury spokesman for the Liberal Democrats, said the sale was like a "national car boot sale." In a twin-pronged attack on Britain's recession, the Bank of England has slashed interest rates to a record low of 0.50 percent and launched a radical quantitative easing programme to boost lending. The central bank will keep its key lending rate at 0.50 percent until at least 2011 as the economy recovers, an independent economics consultancy forecast on Monday. The centre for economics and business research (cebr) added that British borrowing costs would remain below two percent up until 2014. The BoE has so far pumped out 175 billion pounds of new money under quantitative easing, whereby it creates funds by buying bonds from commercial institutions.
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