* Climbdown over reservists funding shows cuts difficult
* Austerity measures loom across Europe
* Ageing population increases demand on finances
By Peter Apps, Political Risk Correspondent
LONDON, Oct 28 (Reuters) - The British government's rapid U-turn over its attempt to cut the funds for training part-time reservists is a reminder of how hard other European leaders are finding it to make even the smallest spending cuts.
Prime Minister Gordon Brown said on Wednesday that the proposed 20 million pound cut had been scrapped, trying to end protests that were helping the opposition Conservatives at a time when British troops are dying in Afghanistan.
The Conservatives welcomed the climbdown and mocked Brown in parliament -- but if they win elections due by June 2010, as opinion polls suggest, they will face many similar, or even tougher battles.
The difficulty of making budget cuts is not unique to Britain. Particularly in emerging Europe, governments have been too poor for stimulus packages and have been forced to jump straight to savage austerity measures to qualify for international financial aid.
That means they are already at the stage that developed world governments will reach when they stop the stimulus funding and begin trying to control spending.
That has pressured coalitions in particular. Latvia was until recently apparently reluctant to make cuts of $1 billion in its 2010 budget, raising fears its government might collapse for the second time this year, jeopardising an IMF deal and damaging investor sentiment across Europe.
Bosnia's entire 1.2 billion euro IMF deal remains under threat as opposition persists to a plan to cut benefits for veterans of its 1992-95 civil war.
The war veterans are a particularly vocal group whose protests outside Parliament have sometimes turned violent. They also make up a significant part of the electorate.
In Britain, the Conservatives have said the country will need to cut spending sharply and embrace austerity to protect a faltering credit rating and its ability to borrow money internationally.
"Defence is not particularly high up people's priorities when it comes to safeguarding services," said Julia Clark, head of political research at pollster Ipsos MORI.
Credit rating agency Standard and Poor's put Britain on negative outlook earlier in the year, though fellow ratings agency Moody's said in October pledges from both main parties to reduce borrowing had helped support the credit rating.
Shadow Chancellor George Osborne told Reuters earlier this week the Conservatives had no set timetable for cuts but would have to cut a record budget deficit -- set to exceed 12 percent of gross domestic product this year -- faster than Labour planned..
Brown and his ministers say it is essential to continue similar spending for now to help pull Britain out of recession and avoid a slump back into prolonged crisis.
Shares in some firms that have benefited from rising infrastructure spending under Labour are already suffering in the stockmarket on expectations of a Conservative win, which could benefit some outsourcing groups who could promise public sector efficiencies.
The Conservatives have pledged to ringfence spending on the National Health Service and international development aid, but have not pledged to protect any other funding. Investors say they want to see more policy clarity.
An Ipsos MORI poll in June showed overseas aid tops the list public spending areas which people say should be cut to restore public finances, followed by benefits payments and defence.
Then came local authority services, which include waste disposal and libraries, social services, the police and schools. Health and care for the elderly were seen as most worthy of protection.
Britain's ageing population means NHS spending, benefits, social services and elderly care need to rise each year, so that even keeping funding constant will probably mean reducing spending on individual patients.
"People just do not understand the issues around social care spending -- that the ageing population means the bill rises every year, and without budget rises that will mean service cuts," said Ipsos MORI's Clark. (Editing by Tim Pearce)