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Publish Date21/08/2012 09:14:20 AM
The United Kingdom unexpectedly reported a budget shortfall in July ONS data showed on Tuesday as the worsening economic conditions suppressed corporate tax revenue.
The U.K. Office for National Statistics reported on Tuesday a July budget deficit which excludes government support for banks of 0.5 billion pounds compared with a surplus of 2.84 billion a year earlier and a revised 14.6 billion deficit a month earlier which also missed expectations for a surplus of 2.2 billion pounds.
The shortfall widened unexpectedly as U.K. struggles to exit the recession. The unexpected drop in tax receipts was in part pressured by the closure of the Elgin gas facility in the North Sea.
The worsening economic conditions in the United Kingdom are surely pressured by the worsening outlook for the global economy and deepening debt crisis. The austerity drive and need to balance the budgets in Europe is also a key pressure on the Kingdom and with the drop in tax receipts Osborne will likely miss the target this year of cutting the budget deficit to 120 billion pounds.
The U.K. economy contracted of the third consecutive quarter in the second quarter of this year by 0.7% on the quarter which is expected to be slightly revised higher but remain in contraction as the recession deepens. Unemployment remains elevated despite the temporary hiring relief from the Olympic Games.
In the first four months of the current fiscal year the deficit widened to 44.9 billion pounds compared to 35.6 billion the same period last year.
The PSNCR (Public Sector Net Cash Requirements), or as known the cash measure, recorded a surplus of 22.9 billion from a revised shortfall of 0.9 billion the previous month and rising from a surplus of 20.9 billion a year earlier.
In the fiscal year today the net debt as a percentage of the GDP rose in July to 65.7% from a record 66.2% in June at 1.03 trillion pounds.
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