Record deficit in April despite tax receipts
Thursday 21st May 2009, 12:17PM BST.
The public sector deficit in April has hit an all-time high for a month usually boosted by tax receipts.
Last month net public sector borrowing was £8.5 billion, giving a deficit of £7 billion.
According to the Office for National Statistics (ONS), net debt rose to £754 billion, equal to 53.2 per cent of GDP.
In April a five per cent rise in public spending was recorded, despite a 9.5 per cent fall in tax receipts.
Howard Archer, chief UK and European economist, said the balance sheet for April was “dire”, and a sign of the times.
“Tax revenues are being decimated across the board by sharply contracting economic activity, declining corporate profitability, soaring unemployment, markedly reduced bonus payments, the VAT cut, and substantially weakened housing market activity and prices,” he said.
“Meanwhile, sharply rising unemployment is also resulting in higher benefit claims, thereby pushing up government expenditure.”
The official figures come as Standard & Poor credit agency cut the UK’s economic outlook from ‘stable’ to ‘negative’.
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