LONDON: Britain will sell its 30 percent stake in postal operator Royal Mail, currently worth about 1.5 billion pounds, as it renews its drive to wipe out the budget deficit, Chancellor George Osborne said.
The sale was announced alongside a further 3 billion pounds of debt-reduction measures as Osborne said he was redoubling his efforts to fix the public finances after his Conservative party’s surprise election win in May.
It is the right thing to do for the Royal Mail, the businesses and families who depend on it and crucially for the taxpayer,” Osborne said.
The sale will begin later this year, and no decision has been taken yet on how it will be conducted.
Osborne wants to run a budget surplus by 2018/19, wiping out a deficit which is currently equivalent to nearly 5 percent of economic output, primarily through spending cuts.
As with any challenge the sooner you get on with it, the better,” Osborne said in parliament.
The other 3 billion pounds of debt reductions, which will come from government departmental budgets in the current fiscal year, will allow Osborne to ease the pace of cuts he has previously outlined for subsequent years.
The sale of the government’s remaining stake in Royal Mail will mark the final stage in one of Britain’s most high-profile privatisations in decades.
In 2013, Britain sold 60 percent of the 500-year-old postal operator, attracting criticism from rival politicians and trade unions who said the firm had been sold off too cheaply. The share price subsequently rose by as much as 87 percent.
Osborne acknowledged those concerns, saying the government would only sell when it was sure it was getting value for money.
Forecasts for Royal Mail have worsened since its flotation, with growth prospects in the key parcel market hindered by increased competition and emails continuing to eat into the letters market.
Nevertheless the stock was trading at around 508 pence on Thursday, well above the initial offer price of 330 pence, but down by around 3 percent on the day.
The CWU will oppose this final part of the selloff and continue to campaign against unfair competition and the race to the bottom which privatisation inevitably brings,” it said in a statement.
