Monday October 12, 02:57 PM
Govt announces massive £16 bln asset sale
By Katherine Haddon
LONDON (AFP) - Prime Minister Gordon Brown announced on Monday a 16-billion-pound sale of state assets including a rail link between London and the Channel Tunnel to cut soaring debt caused by economic crisis.
Brown -- whose Labour Party are facing a likely election defeat by David Cameron's Conservatives -- wants to halve the public deficit in four years after it ballooned amid a deep recession.
The planned disposals, which also include a 33-percent stake in European uranium consortium URENCO, the Student Loan Company and the Tote bookmakers.
"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 financiers during a speech in central London.
"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."
The debt increased after 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 face pressure from a recession which has slashed taxation revenues.
Brown's speech represented an attempt 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 British politics 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," he 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" over how to tackle the economic problems and said the Conservatives wanted to stop quantitative easing and would fail to invest.
Reacting to Brown's speech, Cameron said the government needed to ensure that its policy would pay dividends in the long-term.
"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," he said.
"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 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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