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Osborne Vows To Boost Britain's Productivity

George Osborne has told business leaders he will demand further spending cuts and unveil plans for the biggest ever sell-off of public assets as he bids to boost Britain's productivity.

The Chancellor said he wants a second round of Government savings to be made in the coming months as part of his planned spending reduction of £13bn by 2017/18.

Whitehall departments were called on Wednesday to report back with fresh savings plans by Budget day on July 8, although protected health, schools and international aid budgets will not be affected.

Mr Osborne said: "When it comes to saving money, we all know that the more you can do early, the smoother the ride. And without fixing the public finances so our country lives within its means there can be no economic security for businesses or working people."

In a drive to improve productivity, Mr Osborne also plans to create a new Government-owned company to sell off publicly-owned corporate and financial assets this year.

UK Government Investments (UKGI) is expected to carry out deals worth £23bn in real terms.

The company will be responsible for the sale of shares in Lloyds Banking Group, UK Asset Resolution assets, Eurostar and the pre-2012 income contingent repayment student loan book.

Mr Osborne told the CBI: "If we want a more productive economy, let's get the Government out of the business of owning great chunks of our banking system - and indeed other assets that should be in the private sector.

"To help that happen, I can tell you that we're merging UK Financial Investments and the Shareholder Executive into one organisation, to return Government investments back to the private sector."

The new Government's Budget will seek to fix "long-term weaknesses" in the British economy, including Britain's poor productivity levels and ailing infrastructure, Mr Osborne said.

A "plan to make Britain work better" will be published over the next few weeks, setting out proposals to improve transport, broadband, planning, skills, ownership, childcare, red tape, science and innovation.

British workers' output levels lag behind other leading nations and the issue has become known as the productivity puzzle.

But Mr Osborne insisted it was in Britain's grasp to become "the most prosperous country in the world".

He said: "It would be very easy at the beginning of a second term to take our foot off the pedal. That's not what we're going to do.

"I want Britain to find that extra gear. So we deliver for working people. And with your help, that's exactly what I intend to do."