UK budget deficit races away
The UK’s annual budget deficit soared to £162.4 billion in the 12 months to the end of March, but fell short of the £167 billion forecast in last month’s Budget.
With the deficit is at its highest since the Second World War and total government debt now at £890 billion (or 62% of GDP) all eyes are on the prospects for economic growth as an alternative to savage public spending cuts.
However, earlier this week, Ernst & Young ITEM Club described the prospects for economic recovery in 2010 as “dismal” with output growth likely to be about 1%.
In its latest “Outlook for Business” report, the respected economic forecaster warned: “An export-led recovery is really a growth story for the UK from 2011 onwards, not for this year”.
For 2009 as a whole, Britain’s GDP contracted by 4.9% compared with growth of 0.5% in the previous year.
According to the Office for National Statistics, GDP increased by 0.4% in the fourth quarter of last year but was still 3.1% lower than in the same period of 2008.
GDP figures for the first quarter of 2010 are due out tomorrow.