It seems like UK economy is facing a cool breeze after days of braving the heat. As put up by Stephanie Flanders in her 19th October article on BBC, figures pertaining to Inflation, Retail Sales, Employment and Public Finances have been pleasanter to what was coming out from the respective statisticians.
Even EU Summit, 2012 has also marked its approval of the figures but was relatively conservative to show any signs of relief yet. The National Statistics office has reduced its estimates for first five months of borrowing figures and the volume of this reduction is a sizable £6.7bn. Reason being the spending undertaken by Central Government has actually not reached the levels that had been forecast earlier.
Borrowing figures that came out for September, 2012 are the lowest to have been reported since 2008. The factor relating to revenue growth is also said to have played its part in keeping the deficit low.
However, the situation was different when borrowing figure came out for July 2012 as a surplus figure was reported each time for the month and this time it came out in red. As most of us know July is the month for Individual and Corporate tax filing leading to surpluses and since it wasn’t the same case this time, people were spooked. On the other hand if we take a closer look at where had the government spent this time, we come to witness a major asset transfer taking place for Royal Mail Pensions resulting in a deficit of £0.6bn.
What’s more if we move our eyes to see the revised July 2012 figures, it has been reported at £1.75bn. Some of us may still have problems over the figures reported but it’s not far behind what it was predicted by UK Economists at £2.2bn.
This shows that the fear factor regarding economic situations in UK could afford to relax for a little while, but still the circumstances on the tax front aren’t as encouraging as expected for July 2012. In July corporate tax collections have remained weak and for majority of the part it was the control on public spending that contributed in surplus projections which is not a healthy trend for long term economic growth.
Source: BBC News
Graphs: Tutor2u, Neurope, Euronews