Tags: british | budget | deficit | swells

British Budget Deficit Swells Less Than Feared

Friday, 18 Dec 2009 07:17 AM

The British government's growing budget deficit blew out by an additional 20.3 billion pounds ($33 billion) in November, the largest monthly figure since records began in 1993, according to statistics released Friday.

The figure was not as bad as the 23 billion pounds feared by economists, but is still another unwanted record for Prime Minister Gordon Brown's Labour government as it heads into a general election year.

The Office for National Statistics said the shortfall was up from 15.5 billion pounds in the same month a year earlier, pushing national debt to 60.2 percent of economic output.

Brown and Treasury chief Alistair Darling have resisted calls for tougher steps such as deep spending cuts or tax increases to curb government borrowing. They say the need to support Britain's tentative economic recovery outweighs immediate desires to reduce the deficit.

Darling has instead pledged to halve the deficit — which has reached 83.2 million pounds so far this year — over the next four years.

That stance appears to be gaining some sway with voters as the government has narrowed the lead in opinion polls held by the main opposition Conservative Party, which has pushed for quicker action on the borrowing blowout.

An ICM Ltd. survey conducted Dec. 11-13, found that 40 percent of people polled supported the Conservatives, compared with 31 percent for Labour — a narrowing of 2 percentage points from a survey a month earlier.

IHS Global Insight economist Howard Archer said there was some consolation that the November figure was less than feared "and there are signs that the rate of deterioration in the public finances is slowing as the economic downturn eases."

That meant that Darling's forecast of net borrowing of 178 billion pounds in 2009-10 was more realistic than first suggested, he said.

"Nevertheless, there is still a pressing need on whoever is Chancellor after next year's general election to be much more transparent on public spending cut details and he will also almost certainly have to announce further cuts and tax rises in order to win credibility over the long-term recovery of the U.K. public finances," Archer said.

Moody's Investors Service has warned that Britain needs to curb borrowing to keep its top-grade AAA rating, while the International Monetary Fund expects the budget deficit to peak next year at 13.2 percent of gross domestic product.

That would be the highest level in the Group of 20 leading industrialised and emerging nations.

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The British government's growing budget deficit blew out by an additional 20.3 billion pounds ($33 billion) in November, the largest monthly figure since records began in 1993, according to statistics released Friday. The figure was not as bad as the 23 billion pounds...
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2009-17-18
 

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