RTTNews - U.K. public sector borrowings surged to its highest level for the month of June, pointing towards the worsening finance position of the government.
According to the Office for National Statistics report, there were net borrowings of GBP 13 billion compared with borrowings of GBP 7.5 billion in the same period of the previous year. Though this was smaller than the expected level of GBP 15.5 billion, it was record for the month. The budget forecast for 2009/10 is a net borrowing of GBP 175 billion.
The public sector deficit on current budget widened to GBP 9.9 billion in June from a deficit of GBP 5.8 billion in June 2008. Deficits have been recorded since 2002/03.
As a percentage of the Gross Domestic Product, public sector net debt was 56.6% at the end of June, versus 44.4% at end of June 2008. Net debt totaled GBP 798.8 billion compared with GBP 641.4 billion a year earlier.
In June, the public sector net cash requirement was GBP 19 billion, an increase of GBP 7.6 billion from the net cash requirement a year ago.
In the financial year 2009/10, the public sector net borrowing rose GBP 19.6 billion to GBP 41.2 billion and net cash requirement increased GBP 24.7 billion to GBP 42.8 billion. The public sector current budget was in deficit by GBP 34.1 billion, which was a GBP 17 billion higher deficit than in the same period of 2008/09.
On Monday, the head of the National Audit Office, Amyas Morse said, It is essential that HM Revenue and Customs actively manages tax debt and takes positive steps to clear processing work on hand so that taxpayers have certainty about their liabilities. The economic downturn has been largely responsible for a GBP 21.7 billion reduction in taxes and duties collected by HM Revenue and Customs in 2008-09, the NAO reported.
In May, the Standard & Poor's had revised its outlook on the U.K. to negative from stable, assuming that general government debt burden would reach 100% of GDP even after assuming additional fiscal tightening. The rating agency affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.
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