Record Budget Deficit!


BRITAIN’S budget deficit swelled to a new record level last month leading bourgeois analysts to warn that the financial speculators are getting the jitters.

Public sector borrowing hit a fresh record high in November, the Office for National Statistics (ONS) reported yesterday.

Net borrowing totalled £23.3 billion last month, up from £17.4 billion a year ago, and much more than had been expected.

The borrowing figure was pushed higher by increased spending on health, defence and the EU.

While the government spent 10.8 per cent more in November than the same month last year, its VAT receipts fell 0.1 per cent.

The ONS said public sector net debt now stood at 58 per cent of UK GDP.

Philip Shaw, economist at asset management group Investec, described the latest official figures as ‘extremely disappointing’.

He added: ‘November’s numbers seem to be a result of very strong spending and weak receipts growth, and it is very difficult to judge whether this is just a rogue figure, or whether it represents something more fundamental.

‘Our guess is that it’s probably the former, but the seeds of doubt have been sown to a certain extent.’

Jonathan Loynes, chief economist at Capital Economics, said: ‘Overall, there is nothing here to weaken the government’s determination to see through its austerity programme.

‘But we continue to doubt that the economy will weather the coming fiscal storm as well as it hopes.’

David Tinsley, an economist at National Australia Bank in London and a former Bank of England official, said: ‘You would have thought with the economy really growing at decent rates that the deficit by now would be reflecting that.

‘You’d expect a marked improvement in the 2011 fiscal year and if that doesn’t happen then I think the market will start to get worried.’

Eoin O’Callaghan of BNP Paribas in London, said: ‘The government’s target can be hit, but it can’t afford to keep on seeing slippage of this magnitude.’

Meanwhile, business organisations have begun to drastically lower their economic forecasts.

The CBI says it now expects growth of 0.2 per cent in the first quarter of next year, down from 0.3 per cent.

The British Chambers of Commerce (BCC) now predicts the economy will expand by 1.9 per cent in 2011, down from the 2.2 per cent growth it predicted in September.

The BCC blamed the eurozone debt crisis, austerity cuts, a weak housing market and the forthcoming VAT rise.