Brown To Announce £3 Billion Asset Sale

(Reuters) – PRIME MINISTER GORDON BROWN plans to detail a sale of government assets on Monday aimed at raising £3 billion ($4.8 billion), a draft of a speech provided by his office showed today.

The asset sales will be carried out over the next two years, and include betting company the Tote, the cross-channel rail link between Britain and France, a portfolio of student loans and the government’s stake in uranium-processing firm Urenco.

The bridge and tunnel crossing over the River Thames at Dartford is also up for sale, and local authorities are expected to raise a further £13 billion through asset sales on top of £30 billion already identified in a 2007 report.

Some of these asset sales, such as the Tote, the student loans portfolio, and the 33% Urenco stake, had been mooted before; but did not come to fruition because of difficult market conditions during the financial crisis.

Britain’s budget deficit is swelling to a record £220 billion or 12% of gross domestic product — bigger than most of its peers’ — and how to cut it is a key political theme in the run-up to a national election due by June next year.

The Conservatives, who opinion polls put on track for a substantial victory over Brown’s Labour Party, said last week they would freeze public-sector pay and increase the retirement age to save money, if they were elected.

Brown will stress the need to restore growth in order to reduce the deficit.

‘We also need a deficit reduction plan that supports growth and jobs, not one that snuffs out recovery before it has started,’ he is expected to say to an invited business audience in London.

Increasing growth by 1% a year over the next decade would on its own cut the debt-to-GDP ratio from 100% to 71%, the draft says.

Brown will also note the importance of the European Union sealing bilateral trade deals with India and Korea, as well as achieving progress in the deadlocked Doha round of trade talks.

Before the credit crunch, the sale of the Tote, which specialises in betting on horse-racing, had been expected to raise more than £400 millio; but media reports around the time the sale was abandoned on October 22 suggested that Goldman Sachs estimated it would then raise just £280 million.

Urenco is privately owned, with the Dutch government holding a third of the company and German utilities E.ON and RWE each owning a sixth.

Urenco has a global market share of around 25%, and its net profits rose 13% to 110 million euros ($162.2 million) in the first half of the year, based on revenues of 438 million euros.

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