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The gloomiest Budget ever? Osborne demands £2.5bn more cuts

Hannah Smith
Written By:
Hannah Smith
Posted:
Updated:
20/03/2013

George Osborne has asked Whitehall departments to make a further £2.5bn of cuts, as he prepares to present a gloomy Budget 2013 later today.

The Chancellor (pictured) is trying to squeeze another chunk of cash from several Ministers’ departments in a two-year cost-cutting drive. The proceeds of these savings he intends to invest in capital projects designed to boost economic growth.

Certain core departments including healthcare, schools, overseas aid and HMRC will be exempt from the cuts.

Police and local government budgets will be spared for the first year, while defence will not feel the full brunt of the cuts.

All other Whitehall departments have been told to deliver 1% savings on their day-to-day budgets for each of the two years 2013/14 and 2014/15, on top of cuts from previous budgets and autumn statements, the Prime Minister’s official spokesman said.

Osborne said ministers underspent their allocations last year which means they can afford to make more savings.

Today’s Budget is expected to be one of the gloomiest ever presented, as Osborne reveals his plan to reduce the deficit has gone wildly off track, with deficit reduction postponed from 2015 to 2018. 

He may also have to concede his aim to reduce public debt as a percentage of GDP has been put on hold until the 2017-18 fiscal year.

He is also likely to refer to the loss of the UK’s AAA credit rating, which was a blow to the economy when it happened in Februrary for the first time since 1978.

The Office for National Statistics estimates the UK economy grew 0.2% in 2012, an upward revision from zero growth compared to the previous estimate.

However, the economy is thought to have contracted 0.3% in the last quarter of the year.