UK budget deficit biggest on record for August
BRITAIN’S BUDGET deficit widened to the biggest on record for August, data showed yesterday, a day after the central bank chief said missing its debt goal was acceptable for the government.
Public-sector net borrowing excluding financial sector interventions rose to £14.41 billion (€18.02 billion) from £14.365 billion in August 2011 as Britain’s recession hit company tax receipts and drove up benefit payments.
That was the highest for any August since records began in January 1993, although slightly below economists’ forecasts in a Reuters poll for £15 billion.
British chancellor of the exchequer George Osborne, who has made reducing the deficit a central plank of his policies, may soon face a tough choice between cutting spending further or abandoning his goal of ensuring the debt-to-GDP ratio starts falling by 2015.
The lack of growth and the rising debt pile have increased the tension within the coalition of Conservatives and Liberal Democrats, with some Conservatives urging more cuts to welfare.
The Labour opposition is calling for a loosening of the austerity plan of tax hikes and spending cuts, aimed at erasing the structural budget deficit within five years and reducing the debt-to-GDP ratio.
Bank of England governor Mervyn King – a firm supporter of the government’s efforts to cut the budget gap – said missing the 2015 debt goal would be acceptable if the reason was weakness in the economy. – (Reuters)