No More Mr Prudent
Chancellor of the Exchequer Gordon Brown, the favorite to succeed Prime Minister Tony Blair, may have to increase borrowing by 18 billion pounds ($35.6 billion) over the next three years to pay for higher U.K. government spending.
``He will stand up in Parliament and tell everyone that growth is strong, although that hasn't prevented the public finances from deteriorating,'' said John Butler, chief European Economist at HSBC Holdings Plc in London. ``Since 2002, he has borrowed 100 billion pounds more than he said he would. He is leaving as his inheritance a deficit that is structural rather than cyclical.''
Economic growth at the fastest pace in two years last quarter wasn't enough to narrow the deficit. ...
In the first seven months of the current fiscal year, spending gained 7 percent, outpacing a 6.5 percent increase in revenue. The deficit was 22.9 billion pounds, compared with 20.6 billion pounds in the year-earlier period.
The U.K. has moved more slowly than other European countries toward reducing its deficit since 2003, when its budget gap soared above the EU's limit to 3.3 percent.
Britain's budget deficit will touch 2.8 percent of gross domestic product next year, compared with 2.6 percent in France, 1.6 percent in Germany and 2.4 percent in the U.S
``Under Gordon Brown the national mortgage is now bigger than out national income if we add up all the real liabilities of government,'' said George Osborne, who shadows Brown in Parliament for the Conservative Party. ``Britons will be making repayments on Brown's mortgage for years to come.''
He just can't help spending it faster than it comes in, even with a booming economy the debt keeps rising. And that is without all the off balance sheet debts such as PFI and Railtrack...
Prudence - my arse!