UK finances continue to deteriorate

The government borrowed another $6.7
billion last month to plug the growing hole in the UK’s finances, figures show.

It is the first time the government
has borrowed money in January – usually a bumper month for income from tax
receipts – since records began in 1993.

Andrew Goodwin, senior economic
adviser to the Ernst & Young ITEM Club, called the figures “pretty
ghastly”.

The UK’s total borrowing for the
financial year now totals more than $190 billion.

January’s borrowing figure,
released by the Office for National Statistics, came as surprise to many
economists.

They had expected to see a surplus
in January’s budget, allowing it to repay around $4.3 billion of its debts.

But levels of income tax and
capital gains tax received by the government were significantly lower than in
previous years, the ONS said.

Tax receipts dropped 11.8 per cent
compared with January last year, when the government was able to repay $8.2
billion.

Chancellor Alistair Darling
recently came under pressure from a number of leading economists to act more
quickly in cutting the size of the budget deficit.

The government expects public
sector borrowing to peak at $277 billion this year – equivalent to 12.6 per
cent of GDP.

Mr Darling has pledged to halve
that deficit in percentage terms over the next four years, but argues that
making cuts sooner could harm the UK’s recovery from recession.

The economy emerged from recession
at the end of last year, growing by just 0.1 per cent

Shadow chief secretary to the
Treasury Philip Hammond called the latest figures “appalling”, adding
that total UK borrowing so far this year was equivalent to $7,500 for every
British family.