If the economy is doing so well John Major then why did the government run a record deficit in August?
Well so much for the Fauxstere-Chancellor being serious about reducing the debt and deficit. According to the government funded Office for National Statistics the UK ran a deficit that was more this August than any other August in the history of the UK.
From the release:
Latest figures
- Public sector net borrowing was £14.4 billion in August 2012; this is equal to the net borrowing in August 2011.
- Public sector current budget deficit was £13.2 billion in August 2012; this is a £0.4 billion higher deficit than in August 2011, when there was a deficit of £12.8 billion.
- In 2011/12 public sector net borrowing was £119.3 billion; this is £6.7 billion lower than the Office for Budget Responsibility (OBR) forecasted net borrowing for 2011/12 of £126.0 billion.
- Public sector net debt was £1,039.5 billion at the end of August 2012, equivalent to 66.1 per cent of gross domestic product (GDP).
Which mean that the debt to GDP level in the UK just hit 66%:
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But before everyone thinks that even though the numbers are bad they are around the forecasted level of the government and the Office Budget Responsibility. But keep in mind that this Tory government nationalised the Royal Mail pension back in April. This meant that the government received an extra £28bn that it was not expecting to get. It also means that they’ve taken on some £36bn in liabilities but they of course don’t appear on the books.
What this means is that if it wasn’t for that unexpected boost from the Royal Mail pension the deficit would’ve been some 22% higher than it is today:
Comparisons between public sector net investment and net borrowing for the April to July period are affected by the £28 billion transfer received by government from the assets of the Royal Mail Pension Plan in April. This transfer was foreseen by the OBR and they correspondingly included, in their forecast, figures with and without the Royal Mail pension transfer as the size of the transfer is sufficient to significantly affect comparisons between the year to date and the full year. For this reason, the table includes public sector net investment and net borrowing figures excluding and including the Royal Mail pension transfer. The figures excluding the Royal Mail pension transfer show that, for the year to date, public sector net borrowing has risen by 21.8 per cent, which compares to a forecasted 0.5 per cent growth for the full year.
Got that, the borrowing is now so out of control and tax revenues so poor that if it weren’t for this one time boost to the coffers at the treasury then the forecasting by the OBR would’ve been off by a country mile.
Oh, and before everyone looks at that 66% debt to GDP level and compares it to other countries and thinks it’s not too bad, here’s what the real debt to GDP level is when you include all the bailouts:
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That’s 136% debt to GDP for those keeping count.
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Related posts:
- The UK Government borrowed more this August than at any time in the country’s history
- The surest way to see if John Major is right about ‘green shoots’ is if the BoE stops printing money
- Moody’s are you listening? The UK government is contemplating abandoning reducing the deficit
- More government spending + Increasing debt + massive deficit financing + higher taxes + enormous money printing = double-dip recession… who knew?
- Gold hits new record as UK is downgraded – can we expect more to follow?
Link to this article: : http://www.goldmadesimplenews.com/analysis/if-the-economy-is-doing-so-well-john-major-then-why-did-the-government-run-a-record-deficit-in-august-8054/
Posted by Thomas Paterson on Sep 21 2012. Filed under Analysis.
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