PAIN AND PENNY-PINCHING TO COME IN UK

       It's the deficit, stupid. That was the message, though not in exactly those words, that George Osborne,the ambitious finance ministerin-waiting for the UK's Conservative Party, delivered to the Tory faithful last week as he warned of Britain's mushrooming debt burden.
       "The government borrowed too much, the banks borrowed too much,"he said in a long-awaited speech at the party conference setting out the Conservative agenda going into next spring's election against the Labour government of Prime Minister Gordon Brown."Let's tell the truth: We all borrowed too much. We are sinking in a sea of debt."
       It is rare for a major party anywhere to run for office on a platform of pain and penny-pinching. But Mr Osborne and his fellow Tories, in adapting a variation of the slogan that carried Bill Clinton to victory in 1992, are betting that voters will not just accept a dose of harsh medicine, but will actually appreciate his honesty in offering it.
       Mr Osborne has even gone against a core Tory constituency, the wealthy financiers who fill the offices in the City of London, by saying that he will not reduce the top 50% tax rate recently imposed by Labour on Britain's richest.
       "We have to show that we are fair to all parts of society," Mr Osborne said in an interview in Manchester."It would be impossible to cut taxes now while we are asking others to sacrifice so much."
       It is a cheeky, unproven strategy.Republicans in the United States are also focusing on the country's similarly large deficit, forecast at 12.3% of gross domestic product this year, the highest since World War Two. So the extent to which Mr Osborne can persuade the British public to embrace a programme of reduced social services and public-sector wage freezes - without base-rallying tax cuts - may serve as a model for a 2012 campaign against President Barack Obama.
       At the moment, because of the sharp economic recession there and widespread disenchantment with the Labour Party, the Conservatives are far ahead in the polls. They are widely expected to return to power after more than a decade out of office.
       But that may be the easy part. As Mr Osborne made clear in his speech,Britain, whose currency in recent months has taken a beating even worse than the dollar has, is expected to generate a deficit of 13% of GDP this year,with its government debt forecast to reach 100% of GDP by 2014, according to the International Monetary Fund.
       By comparison, the debt burden in the United States is forecast to increase to 66%, from about 40%, over the same period, according to the Congressional Budget Office.
       Just last week, the European Commission termed Britain's debt "unsustainable" in a devastating report that compared public finances there with those of countries like Ireland, Latvia,Lithuania and Romania.
       According to the report, which has been latched on to by the Conservatives as a further sign of Britain's economic decline, the government needs to find ฃ200 billion.
       Mr Osborne, in setting out the Conservative fiscal agenda, is playing bad cop to the good cop role of David Cameron, the Tory leader. And with his penchant for delivering bad news with little sugar-coating, it is no surprise that Mr Osborne, who is only 38, almost proudly confesses that he is looking forward to being the most reviled man in Britain.
       "You have to be honest with people,"Mr Osborne said in the interview."There is so much distrust in the system that I believe there is a premium on straight talking."
       Mr Osborne, though, is not a naturally gifted political salesman. Indeed,while his Tory colleagues were inclined to push into the conference crowd, he tended to keep his distance. And on television, he often projects the clammy, awkward persona of a schoolboy making his first speech.
       Mr Cameron, who is close to Mr Osborne and comes from a similar background, has transcended the ignominy of his membership in the Bullingdon Club, the elite drinking enclave at Oxford. By contrast, Mr Osborne seems far less removed from the haughty picture of himself and his club members, garbed in bow ties and tails,that has come to define the view that the recast Conservatives still lack a common touch.
       What Mr Osborne does not lack,however, is what even his toughest critics recognise as an acute sense of how to play for keeps in the rough and tumble sandpit of British politics that is at odds with his aristocratic demeanor.
       The first of his political calculations came during his early teenage years when he had his name legally changed from Gideon to George, explaining to a schoolmate at the time that one could not become prime minister with a name like Gideon.
       But it is the more recent gamble persuading Mr Cameron that the Tories must relentlessly attack Mr Brown on Britain's debt - that will most likely define him and the Conservative Party,for better or for worse.
       It has left him open to plenty of personal attacks from the party in power.
       "Cutting spending at the height of a recession - I have never heard of such nonsense," said Peter Mandelson,the business secretary, who has been a senior strategist to Mr Brown and his predecessor, Tony Blair."This is not an economic philosophy; it is crude objectionism."
       Even in the financial district, concerns have been raised that Mr Osborne is too doctrinaire.
       "He comes across as callow and rich," said Andrew Hilton, who runs CSFI, a research center focused on financial issues."The City wants Labour out, but there is trepidation. If we cut spending right now it would be a lot worse."
       At a luncheon for Tory business supporters, Mr Osborne struck a more relaxed tone. But his main focus was the same.
       Britain's deficit "is a clear and present threat; we have to deal with it", he said. Acknowledging the tough measures he laid out during his speech and the criticism that followed, he added:"You have to bring the public with you. To get elected on a false prospectus would be catastrophic. All this will help ensure a democratic mandate."
       To meet his goals, Mr Osborne will have to rely on financial institutions in London and abroad (close to 40%of Britain's debt is held by foreigners)to keep buying government bonds at reasonable interest rates.
       "Osborne is dealing with the hard realities," said Michael Hintze, a prominent Tory financial supporter and founder of the hedge fund CQS, who suggested that Mr Osborne would bring a much-needed business sensibility to the challenges facing the British government."It is a UK PLC issue at this point. You can't just keep spending."