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Spending review: UK economy 'leaving intensive care' Spending review: Job cuts as Osborne reaches deal with MoD
(35 minutes later)
The UK economy is "leaving intensive care", Chancellor George Osborne will say as he unveils his spending plans for 2015-16. The Ministry of Defence has reached a budget deal which will see a cut in the number of its civilian staff, the chancellor has said.
Mr Osborne will outline £11.5bn of Whitehall cuts when he delivers his spending review on Wednesday. But George Osborne told the BBC there would "not be a reduction in our military capability".
But Mr Osborne will announce investment in infrastructure projects, including roads, railways, education and science. The announcement comes three days before the spending review for 2015-16, with Mr Osborne saying the economy was out of "intensive care".
But Labour said the coalition had left the country in a "mess".
Mr Osborne will outline £11.5bn of Whitehall cuts when he delivers his spending review, but is expected to announce investment in infrastructure projects, including roads, railways, education and science.
'Tough choice'
Speaking on BBC One's Andrew Marr Show, he said: "I've settled with the defence department. Many people thought that was going to be one of the biggest challenges."
He added that he and Defence Secretary Philip Hammond had come to agree on a "tough choice".
Mr Osborne said: "The civilian [MoD staff] head count is going to be reduced. There will not be a reduction in military capability."
This comes on top of previous reductions in military and civilian staffing, as the government attempts to reduce the budget deficit.
But Mr Osborne also announced that £10m a year would be made available to help veterans injured in recent campaigns and their families.
This would come from fines imposed for the Libor bank interest rate-fixing scandal.
The chancellor said he had not reached a budget deal with Business Secretary Vince Cable for his department, but added that he was "confident we are going to do this in short order".
Amid the cuts, spending on health, schools and overseas aid have been ring-fenced.
Asked if this meant too big a squeeze on other areas of government spending, Mr Osborne said: "They are called ring-fenced, but they are really are the public's priorities."
Mr Osborne said: "I'm confident we are coming out of intensive care and we can turn this country around. There's certainly a chance of a relapse if we abandon our plan."
Shadow chancellor Ed Balls said the government should do more to boost the economy to avoid the need to make cuts.Shadow chancellor Ed Balls said the government should do more to boost the economy to avoid the need to make cuts.
Mr Balls told BBC One's Andrew Marr Show he was expecting to "inherit a big deficit" after the next general election in 2015.Mr Balls told BBC One's Andrew Marr Show he was expecting to "inherit a big deficit" after the next general election in 2015.
And he urged the coalition to spend an extra £10bn on infrastructure projects before then, adding: "I fear we could be in for a difficult few years."And he urged the coalition to spend an extra £10bn on infrastructure projects before then, adding: "I fear we could be in for a difficult few years."
'Rescue to recovery'
In his spending review, Mr Osborne will announce an infrastructure plan to "power Britain back into the economic premier league".
The chancellor is expected to tell MPs: "Britain is moving from rescue to recovery. But while the British economy is leaving intensive care, now we need to secure that recovery.
"Full recovery won't be easy, but I won't let up in my determination to put right what went so badly wrong.
"We are already making progress; the economy is growing, more than a million new jobs have been created by British businesses and the amount the government has to borrow each year - the deficit - is down by one third.
"But there's more we have to do - it's time for the next stage of our economic plan."
Scale of cuts
And he will launch an attack on the opposition, saying: "Three years ago Labour tried to scare the country about the pain to come if any government actually dared to cut spending and borrowing. But their predictions haven't come true."
Mr Osborne will use fines from the Libor bank interest rate-fixing scandal to benefit war veterans and their families.
The chancellor is still in negotiations with some government departments over the scale of cuts required.
Labour leader Ed Miliband has announced that he would not be able to afford to reverse Mr Osborne's cuts should his party come to power at the next election in 2015.Labour leader Ed Miliband has announced that he would not be able to afford to reverse Mr Osborne's cuts should his party come to power at the next election in 2015.