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UK

Treasury says no decision made to push back cuts

LONDON (Reuters) - The Treasury has not made any political decision to push back its spending cuts programme, but administrative hurdles could lead to some slippage at the margins, a Treasury official said on Thursday.

Chancellor George Osborne pledged the most ambitious spending cuts in a generation in June to bring down a deficit of 11 percent of GDP to close to nothing in five years.

He will present a detailed spending review on October 20 in which most government departments are expected to have their budgets cut on average by 25 percent over the next four years.

But after a political row over child benefit cuts this week, the Financial Times reported that the coalition government could delay some of the planned cuts until later in its five-year parliamentary term.

Markets have given a warm endorsement to the plans and any signs of slippage could make ratings agencies and investors in government debt (gilts) jittery.

The official said the government remained committed to its five-year programme to bring down the deficit.

“The spreadsheets underpinning the spending review have not factored in any reprofiling,” he said.

But he added there was always the possibility that the timing of some spending cuts could move slightly because of the process of ending contracts and laying people off.

Citing senior government officials, the FT said the Treasury was working on plans to “reprofile” spending cuts, to spread the pain of deficit reduction more evenly over the next few years.

It said that a decision on delaying cuts had not been taken but cited an aide to Osborne as saying he could not guarantee that the timing of the cuts would be as laid out in June’s emergency budget.

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