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George Osborne announces £6.2 billion reduction in public-sector spending

George Osborne has today announced £6.2 billion in public-sector spending cuts across the UK with local councils set to bear the brunt of the investment reduction. It was revealed that local councils will receive around £2 billion less in the tax year 2010/11 with all areas of local council services hit hard.

There will be a £1.2 billion reduction in local authority grants, £260 million saved by cutting waste and inefficiencies, £230 million from private financial initiatives and as yet un-detailed savings as well as £270 million from a cut in regional development agency investment. The £1.2 billion reduction in local authority grants will consist of a £260 million cut in the communities department, £309 million from transport, £311 million from education and further cuts in the areas of the environment, food and rural affairs and other Whitehall grants.

While many of these cuts were expected by investment markets and local authorities there is no doubt there are more cuts to follow. Many believe that the £6.2 billion in savings announced today are only 10% of the overall target of the UK government in the short to medium term. If this is the case then UK public-sector investment will be decimated for some time to come as a consequence of the soaring budget deficit under the previous government.

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