LONDON: Britain’s budget deficit widened to the biggest on record for any August, data showed yesterday, a day after the central bank governor said overshooting budget targets may now be acceptable.
The government said a weak economy pushed down corporation tax receipts and drove up benefit payments. As a result, public sector net borrowing excluding financial sector interventions - the government’s preferred measure - rose last month to £14.410bn from £14.365bn in August 2011. That was the highest for any August since records began in January 1993, although slightly below economists’ forecast in a Reuters poll for £15bn.
Finance minister George Osborne, who has made reducing the deficit a central plank of his policies, may soon face a tough choice between imposing more spending cuts or abandoning his goal of ensuring that the debt-to-GDP ratio starts falling by 2015. Late on Thursday, Bank of England Governor Mervyn King - a firm supporter of the government’s efforts to cut the budget gap - said missing the reduction goal would be acceptable if the reason was weakness in the global economy.
Reuters
