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British public finances plunge into record deficit

LONDON - Britain’s public finances dived into the red last month, suffering the worst July deficit on record as a deep recession hammered the government’s tax revenue, official data showed Thursday.

The public sector net borrowing requirement (PSNBR) — the government’s preferred measure of the public finances — ballooned to a deficit of 8.0 billion pounds (9.26 billion euros, 13.19 billion dollars) last month, the Office for National Statistics (ONS) said in a statement.

That was the first July deficit for 13 years and the highest figure for the month since records began in 1993.

The ONS added that last month’s deficit compared with a repayment of 5.2 billion pounds for the same month of 2008. Market expectations had been for a PSNBR deficit of just 200 million pounds in July, according to Dow Jones Newswires.

The government’s taxation revenues collapsed by 15.3 percent last month, compared with a year earlier, in the largest annual decline since monthly records began in 1998.

‘July’s public sector deficit posted a sharp widening to 8.0 billion pounds, the worst July deficit on record — going back to 1993 — and the first deficit recorded in this month since 1996,’ said Investec economist David Page.

‘The deterioration this month is much to do with the reason that July usually records a surplus,’ he added.

‘The first months of the quarter are usually associated with large corporate tax inflows — but these have been amongst the worst hit by the current recession.’

The ONS said the public sector net cash requirement (PSNCR) — an alternative measure of public finances — worsened last month to show a deficit of 200 million pounds, compared with a surplus of 14.5 billion pounds in July 2008.