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BUDGETS SQUEEZED BY PSBR TARGET

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Councils are suffering the consequences of the government's bid to eradicate public sector debt by the end of the d...
Councils are suffering the consequences of the government's bid to eradicate public sector debt by the end of the decade. Chancellor Kenneth Clarke aims to cut the proportion of gross domestic product taken up by public spending from 45% in 1993-94 to 42.5% in 1996-97.

Government spending is planned to fall by £3.8 billion next year, £2.1bn in 1995-96 and £4.4bn in 1996-97. All these figures are tougher than those outlined by Norman Lamont in his March Budget.

Analysis by CIPFA shows aggregate external finance has been cut by £960 million while current grants are likely to increase by £740m, giving a net £200m reduction in support for local government. The chancellor has cut the planned grand total of council spending, both capital and revenue, by £500m compared with the figures published with the March Budget, a far bigger cut than even the defence budget suffered.
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