UK finances deteriorate further

[Hopeless Romantic]

The state of the UK's public finances deteriorated further in January, according to official figures.

The Office for National Statistics said the government had borrowed a further £4.3bn last month.

It is first time the government has borrowed money in January since records began in 1993.
January typically brings the government a large income from tax receipts, giving it a budget surplus and allowing it to repay some of its debts.

But this year tax receipts were significantly lower than expected, the ONS said, with both income tax and capital gains tax income falling sharply.

Tax receipts dropped 11.8% compared with January last year, when the government was able to repay £5.3bn.

Analysts had expected a budget surplus would allow the government to repay about £2.8bn of its debts.
Major challenge

"These are pretty ghastly figures and come as somewhat of a surprise," said Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club.

"January usually yields a healthy surplus due to receipts from corporation tax and, even in the current climate, it is surprising to see the government rack up a deficit."

He added that the deterioration emphasised the scale of the fiscal challenge still facing the government, with Chancellor Alistair Darling facing growing calls to act more quickly to tackle the deficit.

With two months of the financial year remaining, borrowing has already reached £122.4bn.

The government expects public sector borrowing to peak at £178bn this year - equivalent to 12.6% of GDP.

Mr Darling has pledged to halve the deficit in percentage terms over the next four years, but earlier this week a group of 20 economists said action needed to be taken sooner.

The BBC's chief economics correspondent, Hugh Pym, said that whoever formed the next government would face the challenge of tackling the deficit while ensuring that the recovery in the UK economy continued.

Credible plan

Shadow chief secretary to the Treasury Philip Hammond called the latest figures "appalling", adding that total UK borrowing so far this year was equivalent to £4,800 for every family.

Business groups echoed calls for "a credible plan" from the government for curbing the deficit.

The British Chambers of Commerce said a failure to act more quickly was putting the UK's credit rating at risk.

"As well as explicitly spelling out its medium-term spending plans, it is now necessary for the government to announce a freeze in the public sector wage bill, and an immediate review into the cost of public sector pensions," said David Kern, the BCC's chief economist.

The government has defended its approach, arguing that cutting public spending too quickly risks harming the UK's economic recovery.

http://news.bbc.co.uk/1/hi/business/8521587.stm

[Anarcho-Socialist]

1. what the New Labour and the Tory parties plan to cut are small-fry

compared to the £1.5 trillion that Britain bailed out its banking and financial sector with. Of course it's the working class who must pay as usual.

[LeftishBrit]

2. +1000

The working class, and the elderly and ill.

There's always welfare enough for Big Money.