Tuesday, July 21, 2009
UK borrowing explodes
Over the last six months, the UK government has borrowed ₤65 billion. In June alone, the borrowing requirement was ₤13 billion
During the first six months of 2008, the deficit was ₤20 billion. Yes, the first half deficit this year is three times larger than last year.
There is strong seasonality in the UK's fiscal accounts. Tax collections are strongest just before April when the tax year ends. During the second half of the year, the monthly government borrowing are much higher. Last year's second half the borrowing requirement was about ₤40 billion.
Assuming that it is the same this year, then the UK government could end up borrowing close to ₤200 billion this year. This is a borrowing requirement amounting to roughly 14 percent of GDP.
Brown and Darling won't get away with it. The UK economy is heading for the cliff.