UK plans banking levy; bonus curbs
London, May 20, 2010
Britain's new government said on Thursday it planned to introduce a banking levy and rein in bonuses in the financial services sector as it set out its detailed coalition agreement.
Fleshing out a programme first sketched out last week, the Conservative-Liberal Democrat alliance said an independent commission would look into the separation of retail and investment banking.
The agreement said that cutting a deficit running at more than 11 percent of GDP would take precedence over any of the measures in the programme.
'We recognise that deficit reduction, and continuing to ensure economic recovery, is the most urgent issue facing Britain,' the document said.
'We will significantly accelerate the reduction of the structural deficit over the course of a parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes.'
Finance minister George Osborne confirmed he would give details on Monday of plans for an initial 6 billion pounds in cuts to start trimming a deficit forecast to reach 163 billion pounds ($234 billion) this year.
Osborne also said spurring banks to lend was an urgent priority. 'There is an urgent priority that is getting lending going to small- and medium-sized businesses. That is an absolute urgent priority,' he said during a joint press conference with ministers from both parties to present the detailed programme.
The alliance of the centre-right Conservatives and smaller, centre-left Liberal Democrats took office last week after an inconclusive election in which no party won an outright majority. It is Britain's first coalition government since 1945.
Under the agreement, the government will also seek an injection of private capital into state-owned Royal Mail and aim to cut running costs at the Ministry of Defence by 25 percent. - Reuters