Queen feels force of British budget cuts

Queen Elizabeth II was not spared the British budget cuts announced recently, with her spending slashed and grants to the royal family frozen.

The royals have dramatically scaled back their expenditure over the last two decades but felt the bite of finance minister George Osborne's austerity measures nonetheless.

Osborne told parliament that the sovereign had "graciously" agreed to a 14 percent drop in royal household spending in 2012-2013, while the grants she gets for official travel and palace repairs would also be frozen in cash terms.

Total spending will stay at around 30 million pounds (47.5 million dollars, 34 million euros) for the next two financial years, with the 14 percent figure being a reduction on this year's outgoings.

After that, the way the royals are funded will be completely overhauled, he added, with a lump sum grant shaking up the arrangement between government and monarchy that has stood for more than 250 years.

"The household obviously has some challenging times ahead, like any area of government but we welcome the announcement of the sovereign support grant as a modern, transparent and simpler way of funding the head of state," a Buckingham Palace spokeswoman told AFP.

The royal residence said last week that Queen Elizabeth was "acutely aware of the difficult economic circumstances" facing her subjects.

The royal household - the monarch's support and administration operation - gets its money from the grants, plus the so-called "civil list", which covers the head of state's official duties and those of her husband, Prince Philip.The monarch has already agreed to a one-year cash freeze in the civil list. About 70 percent of it goes on staff salaries.

Set by the government, the civil list was fixed in 1990 at 7.9 million pounds per year, and so has effectively dropped in value by 76 percent since then due to inflation. In a deal struck under king George III in 1760, it is paid in return for the profits from the Crown Estate, the sovereign's property portfolio.The surplus was 210.7 million pounds for the year ending March 2010.The new lump sum payment overhauls the arrangement completely. AFP