Friday, 19 June 2009

UK politicians having hard time spinning the need for austerity

As reported here the UK finances continue to deteriorate rather alarmingly.
Public sector net borrowing dwarfed May 2008's £12.2bn and was the highest monthly sum since records began in 1993. As the recession hits home, lower tax receipts and higher benefit payments have pushed net debt to 54.7pc of GDP – a vast jump on the 43.6pc only 12 months earlier.

Alan Clarke, UK economist at BNP Paribas, said May's public finances were "every bit as dire as we had been bracing for. To put this figure in context, a few years ago, £19.9bn would represent half of the borrowing requirement for the entire year – and now we are achieving this in a single month," he said.

Mr Clarke said Britain was "well on track to see borrowing for this year at close to £200bn".

May's figures show income tax receipts fell 11pc to £8.55bn, while the take from corporation tax was down 27pc to £636m and VAT receipts were 19pc lower at £4.88bn. Spending rocketed from £43.7bn to £50.6bn.

Of course all of this has far reaching consequences on the manner in which politicians of both main parties are desperately trying to figure out ways to spin the debate away from the blindingly obvious fact that a new period of severe austerity lies ahead for the electorate.

Funny, but austerity has never been an appealing message for politicians to sell.

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