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Thread: Budget woes deepen for chancellor

  1. #1
    For England and St.George Senior Member ShadesWolf's Avatar
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    Default Budget woes deepen for chancellor

    Government borrowing in the UK has risen to its highest June level to date, putting more pressure on the chancellor's spending plans.
    The public sector net cash requirement was £12.3bn, the highest figure for that month since records began in 1984.

    The figures come a day after Chancellor Gordon Brown announced changes in the way he will measure the budget deficit.

    And they indicate that the chancellor may have a tough time meeting his budget forecasts for the year.

    'Creative accounting'

    The current account budget deficit of £4.7bn was £1.2bn higher than the deficit in June 2004, while the public sector net borrowing figure of £5.9bn (the government's preferred measure) was £1.5bn higher on the year.

    "These are another set of weak public finance figures, which highlight the need for the chancellor to come up with yesterday's creative accounting," said Howard Archer, economist at Global Insight.

    Other forecasters suggested that Mr Brown might be facing a budget gap of £40bn-£50bn by next April, compared with the budget forecast of £32bn.

    The chancellor has said that current borrowing would fall by £12bn this year - but so far, after three months, it is £2bn higher.

    The slowing economy is reducing his tax revenues while government spending is still planned to rise.

    Changing the goalposts

    The Treasury is planning to stretch the economic cycle to nine years.

    This effectively allows Gordon Brown to avoid breaching his "golden rule" on balancing the budget over the cycle.

    On Tuesday, Gordon Brown announced he was pushing back the start of the current economic cycle by about two years from 1999 to 1997.

    This means he will now be able to include an extra £12bn worth of surpluses to offset deficits recorded over the last couple of years.

    However, researchers at the independent think tank the IFS say that he may also have to extend the economic cycle forward into 2006-7 if economic growth falls below expectations.

    And while the Treasury is predicting a small surplus in 2006-7, the IFS and other forecasters a projecting a deficit.

    Tax rise fears

    IFS senior researcher Christine Frayne said that it was likely that the chancellor would have to raise taxes in next April's budget despite his redefinition of the economic cycle.

    But other commentators think that he may be bailed out by higher oil prices.

    "However, it is likely that the public finances may get some relief in later months of the financial year when increased oil revenues from the current high oil price feed through," said Douglas McWilliams, chief executive of the Centre for Economics and Business Research.

    But Mr McWilliams said the figures increase the probability of tax rises, while indicating that short term interest rates are even more likely to drop.

    Borrowing figures are known to be volatile and often subject to revisions, meaning the underlying picture may be brighter, other analysts said.

    "The borrowing numbers are worse than a year ago. It would tend to suggest the public finances are deteriorating but we are reluctant to conclude that from the numbers," said Philip Shaw at Investec Securities.
    So how much will taxes have to go up to help old Gordon out.....

    Spend, spend spend.....
    ShadesWolf
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  2. #2
    Robot Unicorn Member Kekvit Irae's Avatar
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    Default Re: Budget woes deepen for chancellor

    I've read through it all, but I fail to see why this was posted in the Arena rather than the Frontroom.

  3. #3
    Things Change Member JAG's Avatar
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    Default Re: Budget woes deepen for chancellor

    Good old Gordon, doing a brilliant job. The economy is fine, the country is fine and the Tories are not. Woohoo!

    Amazing just how many Tories cannot get over the fact that Labour are doing a damn fine job of running the economy, and introduce such brilliant government measures as well, not to mention have the support of a vast majority of people in the country on it as well.
    GARCIN: I "dreamt," you say. It was no dream. When I chose the hardest path, I made my choice deliberately. A man is what he wills himself to be.
    INEZ: Prove it. Prove it was no dream. It's what one does, and nothing else, that shows the stuff one's made of.
    GARCIN: I died too soon. I wasn't allowed time to - to do my deeds.
    INEZ: One always dies too soon - or too late. And yet one's whole life is complete at that moment, with a line drawn neatly under it, ready for the summing up. You are - your life, and nothing else.

    Jean Paul Sartre - No Exit 1944

  4. #4
    For England and St.George Senior Member ShadesWolf's Avatar
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    Default Re: Budget woes deepen for chancellor

    not to mention have the support of a vast majority of people in the country on it as well
    I thought the VAST majority of people couldnt be bothered to vote. Bring on PR and regions,

    I thing I should start my own party - 'The Mercian Independance party'
    ShadesWolf
    The Original HHHHHOWLLLLLLLLLLLLER

    Im a Wolves fan, get me out of here......


  5. #5
    Lord of the House Flies Member Al Khalifah's Avatar
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    Default Re: Budget woes deepen for chancellor

    the country is fine
    Except for the repeated terror attacks in the capital city.
    not to mention have the support of a vast majority of people in the country on it as well.
    Which country would that be then? Not England where the Tories recieved the largest share of the popular vote.
    Cowardice is to run from the fear;
    Bravery is not to never feel the fear.
    Bravery is to be terrified as hell;
    But to hold the line anyway.

  6. #6
    Things Change Member JAG's Avatar
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    Default Re: Budget woes deepen for chancellor

    They received a larger amount of votes in England because ofa number of things, many of them nothing to do with the Tories, but geography. For instance in many seats - ~100 - Labour voters 'lend' their vote to the Lib dems in a bid to unseat the Tory, as Labour has no chance in that constituency. This drastically reduces Labours vote, clearly. Plus you have the fact that Tory supporters are far more likely to vote than Labour ones.. Especially as people expected Labour to win.. Funnily enough the Tories got more votes in England not because they were more popular than Labour, but because they were and still are so hated!
    GARCIN: I "dreamt," you say. It was no dream. When I chose the hardest path, I made my choice deliberately. A man is what he wills himself to be.
    INEZ: Prove it. Prove it was no dream. It's what one does, and nothing else, that shows the stuff one's made of.
    GARCIN: I died too soon. I wasn't allowed time to - to do my deeds.
    INEZ: One always dies too soon - or too late. And yet one's whole life is complete at that moment, with a line drawn neatly under it, ready for the summing up. You are - your life, and nothing else.

    Jean Paul Sartre - No Exit 1944

  7. #7
    Lord of the House Flies Member Al Khalifah's Avatar
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    Default Re: Budget woes deepen for chancellor

    Funnily enough the Tories got more votes in England not because they were more popular than Labour, but because they were and still are so hated!
    I don't see how having no credable opposition party could be very good for British politics, or even for the core values of the Labour party. I am from the core of Labour support (South Yorkshire) and I would be a Labour voter, but I do not like the values of New Labour and much prefer Old Labour. I even prefer the Tories over New Labour.
    However, because I voted in Cambridge this year I voted tactically for the Lib Dems to unseat a Labour MP (Anne Campbell). I'm proud to say we were sucessful, achieving a 10.5% swing. I suspect many Tory voters also voted tactically for the Lib Dems too to try to drive out Labour MPs so you can't just use the tactical voting argument against them. It's simply a case that few people voted tactically for Labour.
    Cowardice is to run from the fear;
    Bravery is not to never feel the fear.
    Bravery is to be terrified as hell;
    But to hold the line anyway.

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