Reducing the deficit remains painfully slow
20th September 2013
· In August 2013 public sector borrowing, excluding the effects of financial interventions, was £1.
3bn lower than in August 2012. · In the first five months of the current financial year the cumulative borrowing on a comparable basis was £3.7bn lower than in the corresponding period of the last financial year. · In August 2013 Public sector net debt excluding the effects of financial interventions was 74.6% of GDP. Commenting on the Public Sector Finances for August 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: -Although we are making modest progress on reducing government borrowing, the deficit is still unsustainably high. The improvement in economic growth seen in recent months will help to reduce the deficit further, but progress remains painfully slow. The weakening of our financial sector and drop in oil and gas reserves have created a hole in our public finances, and our ability to generate tax revenues will struggle to return to pre-recession levels, even when the pace of growth picks up. -As a result, the government must continue to make cuts in current spending in order to reduce the deficit further, as raising taxes will hinder the economy's ability to grow. At the same time it is critical to shift priorities towards measures that will boost growth such as investment in infrastructure and support for exporters so the economy continues to recover in the medium term.