Thursday May 21, 11:42 AM
Public deficit hits record in April
LONDON (AFP) - The public deficit ballooned to a record 8.5 billion pounds in April as a painful recession slashed taxation revenues, official data showed Thursday.
The public sector net borrowing requirement (PSNBR) -- the government's preferred measure of the public finances -- showed a deficit of just 1.8 billion pounds in September 2008, the Office for National Statistics said.
Despite the record outcome, market expectations had been for a even larger net borrowing requirement of 8.9 billion pounds in April.
The data was published on the same day that international ratings agency Standard and Poor's slashed its outlook on Britain's economy to "negative" from "stable" due to the nation's "deteriorating public finances."
Last month's public deficit was the highest borrowing figure for April since monthly records began in 1993-1994.
"The public finances for April were dire, starting the new fiscal year off as it is highly likely to continue," said IHS Global Insight economist Howard Archer.
"Tax revenues are being decimated across the board by sharply contracting economic activity, declining corporate profitability, soaring unemployment, markedly reduced bonus payments, the VAT cut and substantially weakened housing market activity and prices.
"Meanwhile, sharply rising unemployment is also resulting in higher benefit claims, thereby pushing up government expenditure," Archer said.
The ONS added Thursday that the public sector net cash requirement (PSNCR) worsened last month to show a deficit of 5.2 billion pounds. Analysts had forecast a smaller deficit of 2.8 billion pound.
The April figure compared with a surplus of 2.9 billion pounds 12 months earlier. The PSNCR is an alternative, but more volatile, measure of the state of the public finances.
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