Britain posts first ever January budget deficit, ONS says
Britain posts first ever January budget deficit, ONS says
Thursday 18th February 2010
Britain posted its first ever January budget deficit last month, borrowing a further £4.3 billion, official figures have shown.The Office for National Statistics (ONS) said the government borrowed more money at the beginning of the year due to a lack of tax receipts.
The Liberal Democrats said the figures were "worrying" and the British Chambers of Commerce (BCC) said they "further emphasise the dangers facing Britain's international credit rating".
Much of the reason for the debt was blamed on the lack of income generated from tax receipts, usually a good source of income allowing for budget surplus, being significantly lower than expected. Tax receipts dropped 11.8 per cent compared to last year, when the government was able to repay £5.3 billion of its debt.
The main political parties are continuing to set out their stalls on how they will deal with the deficit and cuts in the lead-up to the general election. Following today's ONS results, Liberal Democrat treasury spokesperson, Vince Cable said: "This is worrying news for the state of the public finances.
"The weakness of the economy is having an inevitable impact on tax receipts.
"These figures underline the importance of having a credible plan to tackle the deficit and stimulate growth and jobs to strengthen future tax receipts. Simply slashing spending now regardless of the economic circumstances is not only a fruitless labour but a damaging one.
"If we cut too soon, the economy will be pushed back into recession, lowering tax revenues even further and negating the effect of the cuts."
While David Kern, chief economist at the BCC added: "As well as explicitly spelling out its medium-term spending plans, it is now necessary for the government to announce a freeze in the public sector wage bill, and an immediate review into the cost of public sector pensions.
"This would persuade the markets, and the rating agencies, that the government is serious about cutting the unsustainable deficit, and enabling the private sector to drive Britain's recovery."
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