Britain braced for more cuts in budget update

British finance minister George Osborne was on Thursday to announce £3 billion of fresh government spending cuts when he outlines his key budget update. Osborne will deliver his so-called autumn statement before parliament at 1115 GMT, but has already written to ministers explaining that a further £1 billion ($1.6 billion, 1.2 billion euros) a year will be trimmed for the next three financial years, according to a statement on the Treasury's official Twitter account. As-well as efficiency savings, central departments will have to find cuts of 1.1 percent over the next two years as the government looks to rein in a stubborn deficit, which narrowed in October to £8.1 billion, a fall of £100 million from October 2012. Osborne is set to announce that ring-fenced departments including health, schools, foreign aid, local government, revenue and customs and the security services will be protected. The first £1 billion is set to come from unspent reserves, according to the statement. The finance minister is also set to unveil pension reforms that will see people currently aged below 50 retiring later, according to British media reports. Under the new rules, people will spend no more than a third of their expected lifespan drawing a state pension. Britain is enjoying a solid economic recovery thanks to a booming property market and rebounding consumer expenditure despite ongoing state austerity. "In the autumn statement I will say the job is not yet done because we have got to make sure we go on taking the difficult decisions to secure the recovery," Chancellor of the Exchequer Osborne said on Sunday. The key Conservative minister pledged to deliver a "responsible recovery", playing down the prospect of any major tax giveaways or spending commitments. Osborne has already unveiled plans to overhaul energy levies in a bid to lower household bills. The move was aimed at countering a pledge from the opposition Labour party to freeze electricity and gas prices, should it win a general election due in mid-2015. Other announcements will include £150m for improving school kitchens and a move towards subsidising offshore wind farms. Britain said Wednesday it intends to sell off its 40-percent stake in Eurostar, the high-speed rail service connecting London with Paris and Brussels, as part of a £20-billion privatisation drive. The ove is part of a new national infrastructure plan, which sets out how the government intends to privatise the equivalent of $32 billion or 24.1 billion euros of financial and corporate assets by 2020. Alongside Thursday's update, the Office for Budget Responsibility (OBR) watchdog is set to upgrade its forecasts for growth and borrowing. Six months ago, the OBR cut its 2013 economic growth forecast, blaming the impact of the eurozone debt crisis. Gross domestic product (GDP) was expected to grow by just 0.6 percent this year, followed by 1.8 percent in 2014 and 2.3 percent in 2015. Since March, however, the nation's economic recovery has strengthened with third-quarter growth of 0.8 percent -- the fastest rate in more than three years. The government is likely to undershoot its £120-billion borrowing target in the current 2013/2014 financial year, which runs from April to March. "With the economy expanding at its fastest pace in thirteen quarters, George Osborne will no doubt enjoy delivering his autumn statement this time around," Daiwa economist Emily Nicol told AFP. On Thursday, the Bank of England is also widely expected to maintain its key interest rate at a record low 0.50 percent, where it has stood since March 2009 in growth.