Tags: Britain | January | deficit | recession

Britain Posts Surprise January Deficit

Thursday, 18 Feb 2010 10:19 AM

LONDON – Britain suffered its first ever January deficit as a record recession slammed the country's tax revenues, official data showed on Thursday, dealing a fresh blow to the government before a general election.

Public sector net borrowing (PSNB) recorded a deficit of £4.3 billion in January, the Office for National Statistics said in an official statement.

That compared with a surplus of £5.3 billion in January 2009, while analysts had been expecting a surplus of £2.8 billion for last month.

January has always seen a surplus since records began in 1993, as the first month of the year is when the government receives taxation receipts from individuals and businesses.

"January's public sector finances were a big disappointment with the PSNB recording its first January deficit ever of £4.3 billion, compared to expectations for a surplus," said David Page, an economist at Investec Securities in London.

"The shortfall reflected both higher spending and weaker tax receipts, particularly income tax."

Britain's mountain of debt, which comes amid fears over the fallout of Greece's huge public deficit, is also the consequence of multi-billion-pound state bailouts of British banks in the wake of the financial crisis.

Despite Thursday's surprise data, a Treasury spokesman said the government remained on track to meet its forecast for public sector net borrowing of 178 billion pounds for the 2009-2010 fiscal year.

Prime Minister Gordon Brown and the ruling Labour Party are seeking to keep power in a general election that must be held by June.

However opinion polls suggest that despite Britain emerging from its longest recession on record in the fourth quarter of 2009, the main opposition Conservatives will return to run the country later this year.

Page said that despite surprising markets, Thursday's data did not alter the tough challenge ahead for which ever party wins the looming general election.

"The task of the next government will be to repair the public finances and restore a path of fiscal rectitude. We remain convinced that this requires a sharper fiscal tightening than envisaged" by the current government, the economist added.

Copyright © 2010 AFP. All rights reserved.

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LONDON – Britain suffered its first ever January deficit as a record recession slammed the country's tax revenues, official data showed on Thursday, dealing a fresh blow to the government before a general election.
Britain,January,deficit,recession
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2010-19-18
Thursday, 18 Feb 2010 10:19 AM
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