British public deficit revised downwards: official

21st May 2010, Comments 0 comments

The British government got a boost on Friday by revised official data showing that state borrowing was less than expected in the 2009/2010 financial year, but nevertheless it hit a record high.

Economists said the public finances data, published by the Office for National Statistics (ONS), would be welcomed by new finance minister George Osborne ahead of his emergency budget due next month.

The ONS revealed that it has revised down the public sector net borrowing requirement to 145.4 billion pounds (167 billion euros, 210 billion dollars) for the 12 months to March, citing increased tax receipts.

The figure, which remains a record high and includes financial-sector intervention measures, contrasted with the prior reading of 152.8 billion.

The ONS added that borrowing in April, the first month of the 2010/2011 financial year, climbed to 10.0 billion pounds -- which was also a record level for the month.

That was an improvement from March and compared with 8.8 billion in April 2009. It also beat market expectations of 10.9 billion.

"April's monthly public finances figures have brought some moderately good news for the new government ahead of next month's emergency budget," said Capital Economics analyst Jonathan Loynes.

"Although the monthly borrowing total of 10 billion pounds was a record for April, last year's full-year borrowing total was revised down by around seven billion pounds."

Borrowing hit record levels last year as a record-long recession had slammed the country's tax revenues and ramped up government spending.

The ONS added Friday that state borrowing, excluding financial intervention, hit a record 156.1 billion pounds in 2009/2010. That compared with the prior estimate of 163.4 billion pounds.

Chancellor of the Exchequer George Osborne will unveil his emergency budget on June 22, after warning of an urgent need to tackle the deficit or face the prospect of a Greek-style debt crisis.

The Conservative-Liberal Democrat government coalition, led by Prime Minister David Cameron, has made tackling the deficit a priority and promised cuts worth six billion pounds this year.

"The good news for the new Chancellor is that the public finances data for April saw a continuation of the recent trend of slowing deterioration," said economist Howard Archer at the IHS Global Insight consultancy.

"The bad news for Mr Osborne is that the public finances remain horrible and that he has one hell of a job in front of him."

He added: "The 22 June emergency budget and the autumn comprehensive spending review are going to have to make very difficult and unpopular decisions on further spending cuts and tax hikes."

© 2010 AFP

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