UK Government Borrows £17.4bn last month – Debt to GDP now 151.4%

Remember when the coalition came into government amidst a fanfare of government spending cuts and ‘austerity’? Well, the below chart should give you a steer on just how the government has performed in meeting its aim of rolling back the state.

(click for sharper image)

The red line cutting its way through the above chart is the trend line – a negative number means the UK government has had to borrow more than it takes in to meet its spending commitments. The long term trend over the past 10 years has been for ever more borrowing by the government. Far from stopping this trend the coalition of Tories and Lib-Dems have continued it.

According to the Office for National Statistics the government had to borrow £17.4bn in May. However, the BBC has an interesting spin on this claiming:

UK public sector borrowing falls back in May – Public sector net borrowing fell in May, reversing a surprise overshoot in government borrowing seen in April

Go look at that chart again – the long term trend is still firmly in place with ever increasing borrowing requirements. Back out the monthly ‘noise’ and the trend is there for all to see. £17.4bn borrowing in one month is still the 8th highest ever monthly figure borrowed in the history of the UK.

More worryingly from the ONS report is the news that when you include all the UK government financial interventions the Debt to GDP ratio is at 151.1%:

The reason that the government didn’t have to borrow even more money was because it has managed to raise more revenue – thanks mainly to the rise in VAT. But at what cost?

The economy is skirting dangerously close to re-recession and those bumper tax revenues are likely to miss expectations in the second half of the year as the UK consumer feels the pinch, thanks to higher taxes and the tax of inflation. There is even talk about cutting VAT back to 17.5% – which would instantly reverse the revenue take.

For all the cheerleading in the press this is a horrible borrowing number only offset by temporary rises in tax revenue – when those revenue streams dry up later in the year look for this government to break the borrowing record of over £20bn in one month – a record incidentally set by this government back in November.

We wonder how many people will be thinking of this government in terms of reduced spending when it breaks its own borrowing record.

Related posts:

1. The US Debt Ceiling… anyone for a game of chicken?
2. UK Inflation – Is there a point to the Government’s inflation target?
3. Gold Hits Six Month High
4. Golden history of Flintshire government site revealed
5. A look at the UK’s ‘real’ GDP

Link to this article: : http://www.goldmadesimplenews.com/gold/uk-government-borrows-17-4bn-last-month-debt-to-gdp-now-151-4-4294/

Posted by Thomas Paterson on Jun 21 2011. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry