In These New Times

“UK public finances have deteriorated further, recording the biggest half-yearly shortfall since 1946 when Britain was emerging from the ravages of the second world war.”

Now we have not only the ravages of the Iraq and Afghanistan wars, but the ravages of a new war: against the British people themselves on behalf of the financiers.

 

Norma Cohen

FT

20th October, 2008

UK public finances have deteriorated further, recording the biggest half-yearly shortfall since 1946 when Britain was emerging from the ravages of the second world war.

The public sector net borrowing requirement jumped to £8.1bn in September, up substantially from £4.8bn the year before, data published on Monday show. For the first six months of the current fiscal year, the net borrowing shortfall stands at £37.6bn.

“Today’s data represent the thin end of the wedge as regards the ongoing cyclical deterioration of the government’s budgetary position,” said Richard McGuire, fixed interest strategist at RBC Capital Markets.

The latest data are likely to stir debate about chancellor Alistair Darling’s stated intention of bringing forward some expenditure planned for 2010-11 in order to help stimulate an economy that most economists now believe is already in a recession.

The current budget was in deficit by £5.9bn in September, substantially worse that the £3.3bn shortfall recorded a year ago.

At the end of September, net government debt – excluding lending to Northern Rock, the nationalised bank – was £563.4bn, equal to 37.9 per cent of gross domestic product.

Howard Archer, economist at Global Insight, said: “Clearly, the chancellor’s aim back in the March budget to keep the PSNBR down to £43.0 bn in 2008-09 and the current budget deficit down to £10.0bn has been blown out of the water big time. Indeed, at the current rate of deterioration, the PSNBR is on course to hit £62.6 bn in 2008-09; and, with the economic downturn deteriorating, the situation is likely to be substantially worse in 2009-10 even without taking into account any costs resulting from the measures taken to support the financial sector.”