Deepening Deficit!
22 / Mar / 2009
The saga continued with Britain posting its biggest budget deficit on record last month, taking the total for the fiscal year to date also to its highest since comparable records began in 1993, official figures showed. The Office for National Statistics said that public sector net borrowing stood at 8.991 billion pounds in February, more than 8 times the level it was a year ago. That took the cumulative total for the fiscal year so far to a record 75.2 billion pounds. With only high-spending March left to go, finance minister Alistair Darling's full-year forecast of 78 billion looks set to be overshot by a very wide margin. Looking ahead, the outlook for the public finances is even bleaker. In November, Mr. Darling predicted that the PSNB in the fiscal year starting in April would total 118 billion pounds, or some 8 percent of GDP. But since then, the economy has shrunk much faster than expected and Darling will almost certainly have to revise his forecasts in the budget next month, raising the prospect of even higher gilt issuance. The public sector net cash requirement stood at 4.359 billion pounds in February, the highest total for that month since 1995. Further negativity came along in the shape of the employment data. The number of people claiming jobless benefit rose by the biggest amount on record last month, official data showed on Wednesday, and the wider measure of unemployment rose above 2 million for the first time since 1997. The Office for National Statistics figures showed the claimant-count rose by 138,400 in February, after an upwardly revised increase of 93,500 in January. That was well above analysts' forecasts for a rise of 85,000 and the biggest monthly increase since comparable records began in 1971. The internationally comparable ILO measure of unemployment rose by 165,000 in the three months to January to 2.029 million -- the highest since 1997. The worse than expected unemployment figures will reinforce fears that Britain's economic downturn could be more painful than previously thought. Average earnings including bonuses in the three months to January grew an annual 1.8 percent, the weakest since records began in 1991. The single month annual rate actually fell by 0.2 percent, the first fall on record.