The FINANCIAL — British Prime Minister Gordon Brown unveiled plans on October 12 to sell off state assets worth an estimated £16 billion ($25 billion) in a bid to cut the soaring government debt caused by the global economic crisis.
"We plan a sale of assets to deal with our debt issues and … 16 billion (pounds) of assets will be sold within the next two years," Brown told economists in central London, Xinhua News Agency wrote.
The sale of assets, which also includes the government's 33 percent stake in European uranium consortium Urenco, spearheads the ruling Labour Party's attempt to boost its economic credentials as it loses ground to the opposition Conservative Party ahead of next year's general election, AP reported.
Brown has maintained that the government must continue to spend its way out of recession, in contrast to the Conservatives' position that spending cuts are necessary to prevent a blowout in the public finances and turn the economy around, the same source wrote. The asset sales will allow the government to raise money to pay down the public debt and the budget deficit — the gap between spending and revenues. With Britain in the middle of its worst recession in decades, public borrowing is forecast to reach a record 175 billion pounds next year.
Brown said that the British government will sell off the undersea Channel rail link, a bridge, and a betting company to raise 3 billion pounds (4.8 billion dollars), Xinhua informs. He also said that British local governments will sell off another 13 billion pounds (21 billion dollars) in assets such as business parks and leisure centers.
"We have said very clearly that we will reduce the deficit by half over the next four years," Brown said, according to CNN. "We need a deficit reduction plan that supports growth and jobs not one that snuffs out recovery before it has started."
The same source reported that speaking on the BBC, Business Secretary Peter Mandelson said the selloff would enable the government to "plug the hole" in national finances while avoiding "savage cuts" in spending he said were advocated by the opposition Conservative Party.
Reacting to Brown's announcement, David Cameron, the Conservative leader, supported the sale but said the government must get value for money, according to Al Jazeera. "Obviously we do need to do this but we must make sure, as every family knows, if you sell something it can help in the short term but it does not help you live within your spending in the long term. "We have still got to get to grips with public spending, get to grips with the deficit. "We must make sure we get good value for money."
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