LONDON - QUEEN Elizabeth II was not spared the British budget cuts announced on Wednesday, 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. Mr Osborne told parliament that the sovereign had 'graciously' agreed to a 14 per cent 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 (S$61.8 million) for the next two financial years, with the 14 per cent 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 spokesman 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 per cent of it goes on staff salaries.

UK budget cuts hit the Queen