Monday October 12, 12:05 PM
Britain announces massive assets sale to cut debt
By Katherine Haddon
LONDON (AFP) - British Prime Minister Gordon Brown announced on Monday a massive 16-billion-pound sale of state assets including the Channel Tunnel rail link, to cut soaring debt caused by economic crisis.
Brown, facing a potential election wipe-out next year at the hands of the main opposition Conservatives, wants to halve Britain's deficit in four years after it ballooned amid a deep recession.
The planned disposals, which also include the 33-percent stake in European uranium consortium URENCO, the Student Loan Company and the Tote bookmakers, would raise the equivalent of 25.4 billion dollars or 17.2 billion euros.
"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 gathered in central London on Monday.
"We have listed a number of assets that we are determined over the next period of time to put into the market place.
"That includes the student loan book, the Channel Tunnel rail link, that includes URENCO -- subject to security issues being addressed -- and that also includes the Tote, other facilities, and (a) property portfolio."
Britain's public finances have increased under the weight of an expensive bailout of the troubled banking sector.
The public deficit is widely forecast to strike 175 billion pounds this year as the nation's finances also buckle amid a fierce recession, which has slashed taxation revenues.
The Conservatives, who are well ahead in the opinion polls with a general election due by June, set out their plans last week for tackling Britain's debt problem.
Brown is bidding to reclaim the initiative for his governing Labour Party.
His speech included a series of attacks on Conservative policies, a taste of the electioneering flavour which British politics is likely to adopt in the coming months.
"Our deficit reduction plan is deepening, it is far-ranging, it takes account of the issues," Brown added on Monday.
"The difference between it, and those of other parties... is that deficit reduction can happen in a way that does not lead to a deterioration in front-line public services, and make sure that we have the investment that is necessary for the long-term growth of the economy," he said.
Conservative leader David Cameron, reacting to Brown's announcement, said that selling government assets was a good idea.
"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."
In a twin-pronged attack on Britain's recession, the Bank of England has slashed British interest rates to a record low of 0.5 percent and launched a radical quantitative easing (QE) programme to boost lending.
The British 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 (194 billion euros, 287 billion dollars) of new money under QE, whereby it creates funds by buying bonds from commercial institutions.
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