British government plays down rift with U.S. fiscal policy in run-up to G8, G20 summits

11:09, June 26, 2010      

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Canadian Prime Minister Stephen Harper (L) welcomes United Kingdom Prime Minister David Cameron to the G-8 Summit at Deerhurst Resort in Huntsville, Ontario, on June 25, 2010. (Xinhua/Pool)

The British government has played down a dispute with the United States on fiscal policy in the run-up to the G8 and G20 summits in Canada this weekend.

The issue that seems set to split world leaders in the run-up to the meetings is when and how deep countries should cut spending to balance their budgets, with Britain favoring the "cut now, cut deep" approach.

The new coalition government, which came to power after the general election on May 6, has made its principal objective tackling the record public spending deficit, which for the year 2010-11 is 153 billion pounds (about 235 billion U.S. dollars).

Chancellor of the Exchequer George Osborne Tuesday introduced the toughest budget seen in Britain for 50 years. It heralded 25 percent spending cuts across many government departments.

Twinned with the cuts is a rise in taxes, with a sales tax set to rise next Jan. 1 from 17.5 percent to 20 percent.

Osborne's stated aim was to deal with the debt immediately. "The hole in the public finances was so great and the debts were so large... if you have got a debt problem, you have got to deal with it."

The approach is backed by both members of the coalition, the Conservatives and the Liberal Democrats.

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