British Government Reports Deficit for First Time

EconomyFor the first time since 1993, when the records began, the British Government has posted a budget deficit for the month of January. As per the calculations of the Office for National Statistics, the Government has spent an amount which is £4.3bn more than its income.

This appears to be an outcome of the economic meltdown and it may give way to increase in taxes and reduction in the Government's spending.

"These are pretty ghastly figures and come as somewhat of a surprise given the smaller overshoots of the past couple of months. January usually yields a healthy surplus due to receipts from corporation tax and even in the current climate it is surprising to see the government rack up a deficit", said Andrew Goodwin, Senior Economic Advisor to Ernst & Young Item Club.

The total public sector debt is estimated to be 59.9% of the GDP.

"January's UK public finances figures are truly dreadful and further underline the need for much more decisive action to improve the fiscal position when the economy is strong enough to withstand it. We had expected the normal January surplus to be smaller than last year's, but the outturn has dashed any hopes that the worsening trend in the public finances might finally be easing a bit", said Jonathan Loynes, an Analyst at Capital Economics.

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