Government borrowing in the United Kingdom has grown. That means austerity measures may not be aggressive enough, and the level of tax collection not great enough, to close the national deficit at forecast rates. The Office of National Statistics issued preliminary June data that includes the following information:
Public sector net borrowing was £14.4 billion in June 2012; this is £0.5 billion higher net borrowing than in June 2011, when net borrowing was £13.9 billion.
Bloomberg’s consensus forecast for the figure was for a deficit of 13.4 billion pounds. The U.K. government, like many throughout Europe, quickly has found that the fruits of austerity may not be a drop in deficits at all. This will increase calls for stimulus packages to kick-start economic growth and, hopefully, the tax receipts that should accompany it.
Douglas A. McIntyre