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PUBLIC SECTOR DEBT/GDP RATIO TO BE CUT

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The Financial Times (p1) reports that the government is to cut the ratio of public sector net debt to gross domesti...
The Financial Times (p1) reports that the government is to cut the ratio of public sector net debt to gross domestic product to 40% and hold it there.

Following yesterday's publication of a treasury paper in the framework for fiscal policy, Mr Brown said he was committed to 'bearing down on debt'.

But the move is expected to disappoint ministers in charge of big spending departments. 'This hairshirt capitalism from the treasury could be disastrous,' said one. 'The next year could see a wave of public sector strikes if we do not ease constraints on pay.'

The last published figure for the net debt/GDP ratio was 45% in April 1997, but the treasury estimates it fell to 43.5% during the last financial year.

A government spokesman said the aim was to reduce it to 40% before the election and avoid sharp divergences through the economic cycle. 'It could fall below that,' he added.
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