LONDON: The British government borrowed an additional 6.5 billion pounds in December 2005, according to the Office for National Statistics. In December 2004, the figure was 6.2 billion pounds. Through the fiscal so far, the government's deficit stood at 38.9 billion pounds compared with 38.4 billion pounds over the same period in 2004-2005.
As much of the rise in borrowing was on account of increased investment, borrowing on the current budget during December, which strips out investment, was slightly lower, at 4 billion pounds against 4.8 billion pounds in December 2004.
Analysts now feel chancellor Gordon Brown is not likely to make the targets mentioned in the pre-budget report of 10.4 billion on the current account and a total net borrowing of 36.9 billion pounds at the end of financial year. They are of the opinion that he will be forced to increase taxes and cut down on public spending growth.
They say data for January 2006 will be crucial if the chancellor has to meet his estimates. The corporation tax and self- assessment tax receipts come in January.
Brown had insisted that in spite of the upward revision in borrowings, he would be able to comply with his golden rule of balancing the budget, excluding investment, over the economic cycle, with a surplus of 16 billion pounds.
According to the ONS figures, public sector net cash requirement in December was 14.9 billion pounds, compared with 14.6 billion pounds last year. The increase has been attributed to higher gilt interest payments. On a cumulative basis, it was 44.1 billion pounds during the nine months against 41.2 billion pounds last year.
Net debt stood at 460.3 billion pounds at the end of December, which is 37.2 per cent of GDP and represents the highest debt to GDP ratio since December 1999. According to Gordon's golden rule, the ratio should be below 40 per cent of GDP.
Shadow chancellor George Osborne said Brown has breached the borrowing target for the full year set by himself in the pre-budget report. He said Brown's lack of fiscal responsibility will damage the Britain's ability to compete. It will also mean further tax rises are inevitable.
The treasury said the measure of public finances cannot be judged on a month-by-month basis and the forecasts are made over a full year and the fiscal rules measure over a full cycle.
Posted
on : Sat, 21 Jan 2006 14:30 GMT | Politics News
By : Mike Lawson
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