This collapse of government finances in what is usually the most buoyant month of the year points up the reluctance of a majority of the Bank of England’s Monetary Policy Committee to go along indefinitely with printing money - Quantitative Easing. With figures like these Cameron’s warning earlier in the week (see “The slump hasn't gone away!” sent 19/8/09) “You can get to a level of government debt where, not that it becomes certain that people will cease to lend you the money, but you start running the risk of them demanding higher premia, higher interest rates.”
If that were to happen economic collapse would threaten.
Christina
[And today in their relentless pursuit of 'green shoots' the Mortgage Lenders headline July's growth in lending. But they do not point out that July's lending is always higher than June's and that this year's July lending is well down on last years! Spinning seems inescapable!]
TELEGRAPH
20.8.09
Government borrowing jumps as tax receipts plummet
Plummeting tax receipts - especially from companies - saw Government borrowing surge to its highest level for the month of July since records began.
Public sector net borrowing was £8bn in the month, compared with a repayment of £5.2bn in the same period last year, official figures showed on Thursday.
The figure was much worse than the £500m deficit expected by analysts, and comes as the recession continues to reduce the government's tax returns.
"This is worse than bad," said Alan Clarke, an economist at BNP Paribas. "Corporate tax receipts are usually strong in July but no one is making any profits.
"At this rate, the Chancellor is going to overshoot his borrowing forecasts by at least £20bn.
The Office for National Statistics (ONS) said it is the first time the Government has borrowed in July since 1996 and the highest figure for the month since records began in 1993.
There was more encouraging news on retail sales and mortgage lending.
UK retail sales rose 0.4pc in July from June, taking the annual gain to 3.3pc, according to figures from the ONS. The annual figure was the highest since May 2008. The monthly gain had been expected to be smaller, following the strong 1.2pc increase in June.
Mr Clarke said: "The retail sales numbers are better. If you've got your job, then costs are coming down and people are spending a bit of that windfall. But with unemployment set to rise, we don't expect it to continue."
Mortgage lending jumped by 26pc during July [It always DOES jump in July over June. It was DOWN on the previous year -cs] ! as the housing market showed further signs of improving, according to the Council of Mortgage Lenders.
Around £16bn was advanced during the month, the highest figure for nine months and up from £12.7bn in June. The CML said the increase was further evidence of a modest improvement in the market after an exceptionally weak winter.
However, it cautioned that activity still remained subdued by historic standards, with lending last month the lowest for July since 2001 and well down on the average of £27bn seen during the past seven years.
DAILY MAIL
20.8.09
Government borrowing hits £49bn in highest July deficit on record
By DAILY MAIL REPORTER
Plummeting tax receipts saw Government borrowing rocket to its highest level for the month of July since records began, official figures showed today.
Public sector net borrowing was £8 billion in the month, compared with a repayment of £5.2 billion in the same period last year.
The Office for National Statistics (ONS) said it is the first time the Government has borrowed in July since 1996 and the highest figure for the month since records began in 1993.
Today's figure brings total net borrowing to £49.7 billion in the four months of the current financial year, compared with £15.9 billion last year.
The nation's overall debt, at £800.8 billion, now accounts for 56.8% of gross domestic product (GDP), its highest since the measure started in 1974. [And massively higher than the 40% ceiling Chancellor Gordon Brown was so proud of! -cs]
And the public sector budget deficit, of £5.1 billion, was the first negative figure for July on record.
Chancellor Alistair Darling has indicated net borrowing over the year as a whole will reach £175 billion as recession hits tax revenues, while spending on unemployment benefit soars.
July is normally a strong month for the public purse as it includes a quarterly corporation tax bill.
Business tax revenues, which the ONS said were flattered last year by higher oil prices, weighed heavily on the month, down to £6.2 billion from £9.9 billion in July last year.
Accrued income tax for the month was down 13%, while VAT takings were reduced 18% from last year.
And total receipts, which include taxes and interest earnings, were down 15% in July, the biggest decline since 1998.
Meanwhile public sector spending, including unemployment payments, was up 10.4%.
Recent figures showed unemployment climbed to a new 14-year high of 2.43 million in the three months to June. The figure is expected to climb still further as the recession takes its toll, with jobless numbers exceeding three million next year
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