Hammond misses his target to bring down UK’s budget deficit in FY 2018/19

Britain’s finance minister Philip Hammond missed his target for bringing down the country’s budget deficit in the 2018/19 financial year.

Borrowing in the 12 months to the end of March totaled 24.7 billion pounds, 41 percent less than in the 2017/18 tax year but higher than the forecast of 22.8 billion pounds made by Britain’s independent budget office last month.

The numbers were provisional and could be revised. The shortfall was smaller than the Office for Budget Responsibility’s previous forecast of 25.5 billion pounds.

As a share of economic output, the deficit fell to its lowest in 17 years at 1.2 percent, down from nearly 10 percent during the depths of the global banking crisis a decade ago, the Office for National Statistics said.

In March alone, Britain ran a budget deficit of 1.7 billion pounds, above all forecasts in a Reuters poll of economists that had pointed to borrowing of 400 million pounds.

The figures showed tax receipts continued to grow strongly in March, but higher government spending accounted for the wider-than-expected deficit, mostly down to purchases of goods and services.

Hammond has held out the prospect of billions of pounds of extra public spending or tax cuts if parliament approves the Brexit deal agreed by Prime Minister Theresa May with other European Union leaders.

But lawmakers within the Conservative Party of May and Hammond remain divided on the deal, leading to the EU extending the Brexit deadline until the end of October.

Hammond has said he could also use his “fiscal headroom” to help the economy weather a no-deal Brexit shock.

source: Reuters