THE UK government borrowed £600 million in July to cover the gap between spending and revenue, the ONS reported yesterday.
The city is aghast at the bad news, since there was a surplus of £2.8 billion in the same month last year.
It is now expected that the government will end up borrowing about £30bn more this year than last – an absolute disaster.
Four months into the financial year the government has already borrowed £44.9bn – £9.3bn more than the same period in 2011, and that excludes the banking interventions and the one-off boost in April from the transfer of Royal Mail pension assets to the Treasury.
Labour called the figures ‘a damning indictment of a chancellor who promised to secure the recovery and get the deficit down’.
Unite general secretary Len McCluskey commented: ‘With each report on the state of Britain’s economy comes more evidence that Tory austerity is failing disastrously and there are real questions about the competence of this government.
‘Instead of growing the economy in the summer months, George Osborne actually plunged the country £600 million more into the red in July.
‘This fiscal bungling is now dangerous. The City must accept what the rest of us have said all along – this government is hurting but it is not working.’
Meanwhile, Finland’s president has tried to reverse the tide of ‘alarming comments’ that Finland will quit the euro.
Finland’s foreign minister hit the headlines by saying that euro finance ministers have been privately discussing the collapse of the single currency.
But President Sauli Niinistö said: ‘Abandoning the euro is not at all a solution. ‘The EU should strive to do everything in their power to solve problems. Leaving the euro is not a solution at all.’
Ivan Glasenberg, chief executive of mining giant Xstrata, said: ‘Weaker commodity prices reflect fears that a disorderly break-up of the eurozone will hurl the world economy back into another downturn.’
• Belize is in danger of defaulting on its debt after it missed a $23m (£14.6m) bond payment due on Monday.
The government still has a 30-day grace period to pay the interest, but said it was unlikely to be able to do so.
Creditors accuse Belize of trying to force a Greek-style debt restructuring on holders of the $550m bond, which represents half its public debt.
The row has drawn attention to Caribbean countries growing debt burden amid falling tourism revenues.
Much of the region depends on tourists from Europe and the US for its income, but the global financial crisis has cut visitor numbers severely.
