Germany and the UK Government is ready to design a budget deficit reduction up to 40% for the period 2010-2014, as part of fiscal consolidation efforts. Budget blueprint released by the Ministry of Finance of Germany, as reported by Bloomberg today, shows a total decline in the German budget deficit in 2010 – 2014 of about 137 billion euros. Thus, the total budget deficit is expected to touch 218.5 billion euros for 2010 to 2014. This is down from the draft budget deficits created in July 2009, amounting to 355.4 billion euros.
In the show Andrew Marr Show on BBC 1 television station, British Transport Minister Philip Hammond reveals UK Treasury has ordered the majority of the ministers to make deficit reduction scenario of 25% and 40% for four years. Coalition of Conservative and Liberal Democratic Party central England proposes cutting spending and raising taxes by the amount of 113 billion pounds (U.S. $ 172 billion) to reduce the budget deficit which is currently 11% of GDP.
“We’re not going to cut 25% uniformly in every department. Indeed there is no department that should reduce spending fully 40%, but some departments may need to cut a little larger than 25%, “explained Hammond.
Meanwhile, the Commerce Department was ordered to explain in detail the mechanism of cutting spending to 11.5 billion pounds before 2015 from 19.2 billion pounds in fiscal year 2010.
Education Minister Michael Gove and Defense Minister Liam Fox have also been asked to prepare a spending reduction proposals amounting to 10% and 20%. Department of the gain exclusion is the Department of Health and Department for International Development.
“We are committed to reducing the large budget deficits to lower interest rates in the long term, protecting jobs and maintaining quality public services are the keys,” British Finance Minister George Osborne said in a statement in an email.
Internal spokesperson Labor Party Alan Johnson said the idea of cutting spending without compromising large-scale public service is just fantasy. UK Fiscal Policy Office last week estimated that 610 000 jobs could be lost within five years if implemented tightening spending.