• Government borrowed £16bn May, when £18bn expected
• Chancellor assumed stick planned wide-ranging cuts
• You chancellor: where do you think cuts should fall?
Britain’s budget deficit came lower than feared last month, latest indication that public finances over worst of financial crisis.
The government borrowed £16bn May, below last year’s £17.4bn less than the £18bn expected City economists.
Excluding bank bailouts, borrowing the whole last year was £154.7bn, which is better than the £156.1bn predicted the Office Budget Responsibility Monday. The government expects borrowing to hit £155bn this year, down £163bn forecast Labour.
However, nation’s debt has now reached £903bn – equivalent 62.2% GDP, highest since records began 1993, underlining task faced by coalition government cutting debt burden.
The news comes as chancellor George Osborne prepares deliver his first budget next Tuesday, which is expected contain package wide-ranging spending cuts and tax increases, possibly including rise in VAT.
“The big picture of course that borrowing remains extremely high and additional measures reduce deficit will be required in next week’s budget,” said Vicky Redwood at Capital Economics. “Indeed, government appears keen act sooner rather than later, yesterday announcing additional spending cuts from cancellation of pending projects. We expect tax rises and spending cuts adding up perhaps £20bn per annum be announced next Tuesday.”
Earlier this week, deputy prime minister Nick Clegg said far-reaching action needed tackle Britain’s deficit, as the newly formed OBR revised economic growth predictions for next year down to 2.6% from Labour’s figure of 3 to 3.5%. He singled out a soaring bill for “unreformed gold-plated” public sector pension schemes as an area facing urgent cutbacks.
The OBR did not have today’s public finance figures when it compiled its forecasts. Marc Oswald Monument Securities said picture painted May’s data “to certain extent looks rather better” than OBR had assumed. However, analysts do not believe it will deter Osborne from announcing hefty cuts next week.
“The public finances still dire so May’s improved data will not deflect Mr Osborne pressing ahead with his plans step up pace fiscal consolidation in Tuesday’s emergency budget,” said Howard Archer IHS Global Insight.
“Pressure for accelerated fiscal tightening UK being maintained countries across eurozone stepping up their austerity measures reaction region’s sovereign debt crisis,” Archer added.
‘Fiscal Drag′ boosts tax revenue
The better number May stems from an improved tax take, with income tax receipts up nearly 11% April and May this year compared with the same period last year. This reflects “fiscal drag” – as incomes rise, individuals are pushed into higher income tax brackets – and the higher 50% tax rate for high earners, while VAT receipts are up 25% thanks to stronger spending and the return to the 17.5% rate from 15% at the start of the year, said James Knightley at ING.
“We should see further improvements, relative last year, over coming months given the gradual upward trend growth. However, next week’s budget likely set motion £100bn-plus fiscal austerity over the next five years, which should accelerate this process,” Knightley said.
“Today’s numbers therefore should boost optimism that UK can resolve its fiscal problems, it going painful as government continues point out. Indeed, our key concern that private sector employment gains may more than fully offset public sector job losses.”
0 komentar:
Posting Komentar