* UK plans 2 pct cut to some spending during next two years
* Money saved to be spent on public investment projects
* Unions say government should borrow more to fund growth
By Andrew Osborn and David Milliken
LONDON, March 19 Britain will nudge government
spending away from day-to-day expenditure and towards
longer-term investment over the coming two years in a bid to
spur faster economic growth, the government said on Tuesday.
Speaking a day before the government presents its annual
budget, Prime Minister David Cameron's spokesman said most
government departments would have to cut spending by a further 1
percent in each of the next two financial years.
"That will save us cumulatively almost 2.5 billion pounds
($3.8 billion)," the spokesman said. "It is also allowing the
recycling in the short term of money into capital spending,
which is an important part of the government's agenda."
Finance minister George Osborne, known as the chancellor of
the exchequer, is expected to forecast slower growth and further
delays in achieving the government's deficit reduction goals on
Wednesday, faced with what Cameron's spokesman called "an
unprecedented peacetime economic crisis".
Britain has recently lost its prized top-notch triple-A
sovereign debt rating, and many economists, business groups and
others have called on the government to reverse a fall in public
investment in order to revive growth.
Osborne opposes more government borrowing to fund
investment, but is willing to cut other areas of public spending
to pay for long-term projects. He is expected to detail which
projects will benefit from these latest cuts in his budget on
In December, he announced cuts to most departments' budgets
of 1 percent in the 2013/14 tax year and 2 percent for 2014/15,
raising 3.4 billion pounds to spend on infrastructure and
measures to support businesses.
Public sector trade unions are already due to stage a
one-day strike on Wednesday to protest against existing cuts,
and were swift to condemn Tuesday's news of more.
"With interest rates negative in real terms, the chancellor
has the perfect opportunity to invest in Britain's future,
rather than raiding departmental budgets to cover his failed
economic strategy," said Frances O'Grady, general secretary of
the Trades Union Congress.
The latest round of cuts will not affect spending on health,
schools, international aid or tax collection, while local
government and police will be exempt from the first year's cuts.
They only cover departmental spending, and not welfare payments,
which are categorised separately in Britain's public finances.
Savings made in 2014/15 will also count towards a goal of
reducing departmental spending by 10 billion pounds in 2015/16.