UK budget deficit increases

The UK’s budget deficit is at it highest for over 50 years, which has increased the pressure on Prime Minister Gordon Brown to re-write the borrowing rules as the economy heads into an increased depression.

The deficit is currently at £24.4bn and in the last month, increased to £9.2bn which is higher than the £7.4bn which was predicted by economists.

It was Gordon Brown himself who imposed the self-imposed “sustainable investment” rule, meaning that Government debt has to stay within 40 percent of national income as he aimed for prudence back in 1997 whilst he was Chancellor.

It seems as the struggling economy is denting the budget, Alistair Darling has borrowed £2.7bn to compensate those who lost out after the abolition of the 10p tax band and its seems as though the government must be tentative with taxation.

Robert Chote, the director of the Institute for Fiscal Studies, warned that Government borrowing was already exceeding the forecast promised by Darling himself.

The reduced growth in tax revenues, which economists expect to become weaker, still account for the main reason as to why public finances are in a dire state.

They are also less profitable due to reduced consumer spending, and the stagnant housing market, which has caused a sharp fall in stamp duty monies.

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