Government borrowing up again

Graham_Devon

Government borrowing rose to £11.8bn in September, an increase of £1.6bn compared with a year earlier, according to the Office for National Statistics.

Economists were forecasting that borrowing would hold steady.

The latest figures are a set back for Chancellor George Osborne, who in March pledged to cut the budget deficit by more than 10% over the next 12 months.

Between April and September borrowing was £58bn, a rise of £5.4bn compared with the same period last year.

That is an increase of 10.3%. Last month's figures showed borrowing between April and August was 6% higher than a year earlier.

Apparently economists were "surprised" by this. A correspondant on the other hand pointed out that income tax receipts are not increasing as much as they would have thought. Infact, income tax receipts are up just 0.1% in the last year, even though more people are in employment.

This, it's said, calls into question the varacity of measuring economic success on employment figures when so much of the employment relys on low paid, minimum wage type jobs.

Probably a bit of an annoyance to the tories though. Not only have they been unable to carry out their promise of the deficit reduction by the upcoming election, but borrowing is actually increasing.

Secondly, all the calculations for te budget etc are now totally out of sync, as the OBR calculate that borrowing would be 12% lower than it is today in the budget.

Capital Economics calculate that borrowing would have to be "a whopping 37pc lower than last year in the remaining six months of the fiscal year for the annual total to match the OBR’s forecast".

shortchanged_2

Graham_Devon wrote: »

Apparently economists were "surprised" by this. A correspondant on the other hand pointed out that income tax receipts are not increasing as much as they would have thought. Infact, income tax receipts are up just 0.1% in the last year, even though more people are in employment.

This, it's said, calls into question the varacity of measuring economic success on employment figures when so much of the employment relys on low paid, minimum wage type jobs.

Probably a bit of an annoyance to the tories though. Not only have they been unable to carry out their promise of the deficit reduction by the upcoming election, but borrowing is actually increasing.

Secondly, all the calculations for te budget etc are now totally out of sync, as the OBR calculate that borrowing would be 12% lower than it is today in the budget.

It also makes the Tories favourite pre election promise of tax cuts much less likely or less credible.

Thrugelmir

Graham_Devon wrote: »

Probably a bit of an annoyance to the tories though. Not only have they been unable to carry out their promise of the deficit reduction by the upcoming election, but borrowing is actually increasing.

Why just the Tories. People should be concerned too. The inherent danger is a run on the pound. As investors lose confidence. Been a few years since we had one. Don't forget Labours pledge was to reduce the deficit more slowly and still is.

No one said it was going to be easy. The hardest part is yet to come.

Graham_Devon

Thrugelmir wrote: »

Why just the Tories. People should be concerned too. The inherent danger is a run on the pound. As investors lose confidence. Been a few years since we had one. Don't forget Labours pledge was to reduce the deficit more slowly and still is.

No one said it was going to be easy. The hardest part is yet to come.

I've heard someone say very much differently today (not trying to knock your point, just trying to show how differently people see things).

One person on the air suggested that this will (and has) improved investor confidence, as we're more likely to see more stimulus. The question was how long the "joy" over stimulus will continue on....and he believed it would carry on for "some time yet".

In some camps, the worse things are, the safer people feel, as they believe stimulus will continually be the answer.

Thrugelmir

Graham_Devon wrote: »

I've heard someone say very much differently today (not trying to knock your point, just trying to show how differently people see things).

One person on the air suggested that this will (and has) improved investor confidence, as we're more likely to see more stimulus. The question was how long the "joy" over stimulus will continue on....and he believed it would carry on for "some time yet".

In some camps, the worse things are, the safer people feel, as they believe stimulus will continually be the answer.

Stimulus of what though? There's nothing magical in QE. Like taking medicine there's side effects.

ManAtHome

Seems to be stimulating stock markets - even the suggestion that any CB may possibly print more dosh and it's buy buy buy all the way.

Thrugelmir

ManAtHome wrote: »

Seems to be stimulating stock markets - even the suggestion that any CB may possibly print more dosh and it's buy buy buy all the way.

Demand may push share prices up. The true value of the underlying companies isn't growing though.

UK DIVIDENDS went backwards in the third quarter and are likely to grow by no more than 1.7 per cent this year, according to the latest UK Dividend Monitor from Capita Asset Services

Underlying dividends declined by 2.9 per cent, depressed by the strong pound, weak corporate earnings and a sluggish global economy.

wotsthat

What's the difference between a dividend and an underlying dividend?

I only get the former.

CLAPTON

Thrugelmir wrote: »

Demand may push share prices up. The true value of the underlying companies isn't growing though.

presumably the pound will 'suffer' and so dividends will rise

Thrugelmir

wotsthat wrote: »

What's the difference between a dividend and an underlying dividend?

I only get the former.

A number of companies have been paying special dividends. As was the case when Vodafone distributed the Verizon proceeds. Split these out and the picture looks different.

Thrugelmir

CLAPTON wrote: »

presumably the pound will 'suffer' and so dividends will rise

Exports will likewise be uncompetitive. To pay a dividend companies have to be profitable.