US economy

Britain posts much larger-than-expected budget deficit in August


© Reuters. Britain’s Chancellor of the Exchequer Philip Hammond leaves Downing Street in London

LONDON (Reuters) – Britain recorded a much bigger budget deficit than expected in August, driven by subdued tax receipts, a boost to the state pension and a contribution to the European Union’s budget, official data showed on Friday.

The deficit in August stood at 6.753 billion pounds, compared with 4.345 billion pounds a year ago, the Office for National Statistics (ONS) said. A Reuters poll of economists had pointed to a reading of 3.4 billion pounds.

While this marked the first year-on-year increase in net borrowing for the month of August in three years, the picture still remained largely positive for Chancellor of the Exchequer Philip Hammond, who is preparing his annual budget statement.

The deficit for the first five months of the current 2018/19 financial year stood at 17.8 billion pounds, down 30.5 percent from the same point a year ago.

The figures for August showed tax receipts rose 1.6 percent compared with a year ago, while spending was up 5.4 percent.

For the April-August period, however, receipts were up 4.0 percent while expenditure was up by only 1.9 percent.

The deficit stood at 9.9 percent of GDP when Hammond’s predecessor, George Osborne, took power in 2010 and started a multi-year programme of public spending cuts, and is expected to fall to just under 2 percent this year.

Prime Minister Theresa May, mindful of voter fatigue after years of spending restraint, has promised an extra 20 billion pounds a year in public healthcare funding, phased in over the next five years. Hammond has said he will explain how this will be funded in his autumn budget statement.

Public support in Britain for increased levels of tax to fund more public spending has hit a 15-year high, a National Centre for Social Research survey showed earlier on Friday.

Hammond wants a budget surplus by the mid-2020s, in order to cut national debt as a share of GDP which he says is too high to easily support a big rise in public spending during a future deep recession.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.