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Bills on doormat

Government debt soars as tax receipts fall

By Deborah Hyde | 10:35:13 | 20 August 2009

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Government borrowing soared faster than expected in July, as the government reported falling tax receipts, sparking fears that government borrowing will be far in excess of the chancellor's target by the end of the year.

For the first time in 13 years, the government reported a deficit in the month of July, normally a bumper month for receipts from companies.

But with companies feeling the pinch, public sector net borrowing rose to £8 billion, much more than the £4.9 billion economists had been expecting. This bought total borrowing in the three months to July to £49.1 billion.

In the same period last year, borrowing was only £15.9 billion.

Official government statistics showed that net debt stood at £798.8 billion at the end of July, equivalent to 56.6% of gross domestic product.

Tota receipts dropped 20% as income taxes fell 10.5% and tax on production fell back 7.7%, with corporation tax receipts 38% from last year.

David Kern, chief economist at the British Chambers of Commerce (BCC), said: 'The worse-than-expected public sector deficit emphasises the huge scale of adjustment the UK is facing over the next few years.

‘While it is impossible for the government to properly tighten spending when the economy is weak and unemployment soars, a clear medium-term plan must be formulated to illustrate how the public finances will be returned to health.'

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Comments (18)

Graham Barlow - Economic lunacy

12:25 | 20 Aug 2009

It is beyond my comprehension that this Government could not forecast the obvious massive deficits in in taxation receipts. Last February it took about 19 mins. on the back of an envelope to calculate the drop. It was patently obvious then that Government expenditure would have to be seriously curtailed to maintain some semblance of order to the public account. This they have failed to do and are therefdore guilty of economic treason in my opinion. Are we really having to wait until we have got rid of this lot before prudence and not profligacy is restored to Britains accounts? Printing money will only devalue the currency further. The only way out is to really incentivise the private sector of business(wealth creators) and cut the millions employed by the Government doing very little. Its called Thatcherism. Make it worthwhile to go to work.

Prudence - Back to the drawing board for Darling - AGAIN

12:28 | 20 Aug 2009

Alistair Darlings estimate figures of net borrowing and GDP growth were grossly incorrect. We know that the IMF have already readjusted Darlings optimistic growth forecast down which, in simple terms means bigger deficits to fund. When they say our children will be paying off our debts, they won't be to far wrong. But Labour continue to bury their heads in the sand are are hoping for a miraculous world recovery to bring the deficit under control.

Gaz

12:28 | 20 Aug 2009

Wow, the UK is so shafted! I certainly wouldn't want to live there!

Oh, hang on...

Damn.

John Kenyon - Sorting the Finances

12:37 | 20 Aug 2009

Why are the comments so often more on the ball than the journalist's article??!

Why does the Govt have to wait before starting the cut back? UK Corp isnt that different from any other business/family is it?

Trufflehuneter

13:33 | 20 Aug 2009

John Kenyon

We are lions led by donkeys, and misled by the blinkered unbalanced media!

F - Economic Lunacy

14:01 | 20 Aug 2009

It's not the 'Government' which forecasts growth, tax receipts and debt.

It's the Treasury, and they use the best available data and statistical tools.

If our friend can do it 'on the back of an envelope', he's either a liar or a madman or possibly both.

Certainly the Government accepts the responsibility but they don't calculate the figures.

the only taxpayer left in the uk - perhaps it is time

14:14 | 20 Aug 2009

1) with some companies having intricate multinational tendrils where we can pick up their losses and costs but not theiir profits

2) where tax losses of huge proportions can be claimed back and loosses set against many years trading

3) where prices can be manipulated, supplies withhold and shortages heightened

4) Where massive bonuses can still be justified because the market warrants it and they are said to be worthwhile

5) where people threaten to go abroad or take their taxes and companies or money with them

6) where huge companies and individuals spend fortunes to avoid, to lessen and almost remove their tax obligations so they pay almost nothing.

Is the uk geting a fair deal?

perhaps it is now time to let the whole crumbling establishment crash down rather than support ailing banks with public money, to allow motor car makers to go to the wall rather than continue the 1950's lie that we can all have one. killing our planet.

we have only one planet to leave our children. our only rule is that we should leave it better than we found it, and so that we are better rather than richer

What point is their in living in golden ghettos while every one outside is in penury, expoited and lvining in pollution.

What is the point of prolonging the next bubble and feeding the froth- we need something of substance.

this is only one symptom, it does not cure the cause - let a lone recognise the true issues, effects or what is to come.

Alby - Back to Thatcherism ? Thats why we're in such a mess now!

15:30 | 20 Aug 2009

If Margaret Thatcher had'nt been so blinkered and belligerent then all economic sectors, other than banking and associated services, would not have been decimated and we would not have been in such an exposed position now. True, this current lot are'nt great at all, but the ideological blinkered rot to the economy set in under Thatcher (and Scargill), unfortunately the prejudices which some of us have, have damaged us all .

s taylor - balancing the books

15:49 | 20 Aug 2009

Many posters suggest that the Government drastically reduce their spending now, in order to cut the deficit. But what effect would that have on the economy and jobs? Surely the recession would be deeper and longer!

What they should have done is during the good times put more away for a rainy day.

Trufflehunter

15:52 | 20 Aug 2009

This country has to make up it's mind. Encourage enterprise by lowering the taxes on success or suffer a nasty decline in wealth as those that are economically-active and hard working decide to go to places where they are welcome.

Dave - The elephant in the room?

17:29 | 20 Aug 2009

I am informed that NI pays in full for the National Health Service and pensions, with an annual surplus.

I am also informed that the cost of Social Services now costs more than all the receipts obtained from income tax.

I am also informed that Government Departments 'borrow' from the NI surplus each year in order to fund their needs, which I imagine includes Social Services and 'benefits'.

I wonder where we might be able to make enormous savings; perhaps in a government department where it is suggested that fraud is rife and gaining benefits is a 'soft touch'?.

Mr Angry

17:33 | 20 Aug 2009

We need to break the downward spiral and there is only one way.

Massive cut in public spending, use the money to cut corporate and personal taxes to promote growth and employment.

Before any socialists out there start screaming, at least £100 billion could be cut without losing one single, nurse, doctor, fireman, real copper (not the plastic kind) or teacher.

At the moment £350 MILLION A DAY is going down the tubes in debt interest making foreign investors rich while the NHS is starved of cash. Maddness but at least the borrowing keeps Gordon's public sector voters in a job while the country slids further down.

roger hazeldine - The brains jumped ship.

19:06 | 20 Aug 2009

Some time ago i gave my best efforts to build a very successfull company, 58 people all eating well all driving new cars , for what ,pea nuts,

I sold it to the managers who bought new BMW,S ( BIG MOTORS for WANGERS ) and destroyed it, i know live in Thailand with many other once very successful people from these shores who have all pissed off.

Whats left ; dross from the EC who raid our NHS and dole queues , If you are young and reading this do yourself a favour sell up and move on .England is a dying nation.

Great Britain, That's joke city if i ever heard a good joke,Rome burt from the centre not it's out flung empirers

TM - Government Debt

19:15 | 20 Aug 2009

Spend tax and borrow has been the hallmark of this Labour Government. Labour ALWAYS leave the country worse off after being in power. Will they never learn?

Anthony O' Grady

22:22 | 20 Aug 2009

To Graham Barlow

Are these the same incentivised wealth creators (rhymes with w****rs) who almost destroyed us all.

richard mumford - last ditch stand

07:54 | 21 Aug 2009

there is an election coming and the winner picks up the chalice.

it is almost certain that labour will lose, so they can afford to make sure that the cup contains poison

Richard Hardy

13:16 | 26 Aug 2009

As Margaret Thatcher once said "under socialism you eventually run out of other peoples money".

QED

Richard Hardy - To Alby

13:21 | 26 Aug 2009

Margaret Thatcher's Government took over from - oh yes - a profligate Labour Government who had too large a public sector, borrowed money left right and centre and taxed the wealth and job creators of this country to the point where the brains of Britain were forced abroad.

Thatcher left power in 1991, Tony B Liar and "Old Labour" came back to power in 1997. 12 years to turn the country back to 1978.

That's Thatcherism for you.

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