Surprise July deficit threatens UK austerity plans
(08-21 17:50)
Britain's government finances veered further off track in July after a shortfall in corporation tax revenues and higher spending led to an unexpected deficit in a month that normally has strong tax receipts, Reuters reports.
After nine months of recession, the unexpected deficit underscored that finance minister George Osborne has little room to give the economy a meaningful boost.
The official data cast further doubt on the coalition government's plan to defend Britain's top AAA credit-rating and hold down borrowing costs by cutting its budget deficit.
The public sector finances excluding financial sector interventions - the government's preferred measure - showed a deficit of 557 million pounds, compared with a 2.8 billion pound surplus in July 2011, the Office for National Statistics said on Tuesday.
The coalition government of Conservatives and Liberal Democrats aims to cut the budget deficit to 5.8 percent of gross domestic product this year from 8.2 percent of GDP in the 2011/12 fiscal year.
For the year to date, public sector net borrowing - excluding financial sector interventions and the one-off boost earlier in the year from a transfer of Royal Mail pension assets to the public sector - totalled 47.2 billion pounds, up 11.6 billion from 2011.
When including the Royal Mail transfer, the figure for the fiscal year to date totals 16.9 billion pounds compared with 35.6 billion between April and July 2011.
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