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Public finances in UK deteriorate | Public finances in UK deteriorate |
(about 2 hours later) | |
Both key measures of the UK's public finances were further in deficit than expected in August, latest Office for National Statistics (ONS) figures show. | Both key measures of the UK's public finances were further in deficit than expected in August, latest Office for National Statistics (ONS) figures show. |
The government's preferred measure, of public sector net borrowing, was £9.1bn, against £6.7bn a year earlier. | |
The public sector net cash requirement was in deficit by £5bn, compared with £3.7bn in August 2006. | The public sector net cash requirement was in deficit by £5bn, compared with £3.7bn in August 2006. |
The figures could be a headache for Chancellor Alistair Darling, still dealing with the Northern Rock crisis. | |
Less corporate tax | Less corporate tax |
The figures showed a sharp drop in corporation tax receipts, which almost halved to £704m from £1.28bn in August 2006, and a modest fall in VAT receipts. | The figures showed a sharp drop in corporation tax receipts, which almost halved to £704m from £1.28bn in August 2006, and a modest fall in VAT receipts. |
However, the deficits follow record surpluses in July, meaning the government's overall borrowing target of £34bn for the full financial year may still be achievable. | |
August is traditionally a deficit month for the public finances and July tends to be a month of surpluses. | August is traditionally a deficit month for the public finances and July tends to be a month of surpluses. |
"The public finance data for August were substantially worse than expected, adding to Chancellor Alistair Darling's current woes," said Howard Archer at Global Insight. | "The public finance data for August were substantially worse than expected, adding to Chancellor Alistair Darling's current woes," said Howard Archer at Global Insight. |
"Public finances could be significantly hit over the coming months if the current financial market turmoil increasingly weighs down on economic activity," he added. | "Public finances could be significantly hit over the coming months if the current financial market turmoil increasingly weighs down on economic activity," he added. |
And David Page at Investec said: "On both measures the public finances were very disappointing." | And David Page at Investec said: "On both measures the public finances were very disappointing." |
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