We're gonna need a bigger boat
It's certainly going to be a long and painful road to economic recovery as the public borrowing by the colaition reached a new April record.
Public sector borrowing increased dramatically in April to £10billion compared with £7.3 billion in April 2010, according to the latest figures from the Office for National Statistics (ONS). This represents the highest public sector borrowing figure for April on record.
In part this was because last April all of the receipts from the bankers bonus tax introduced by the then Chancellor Alistair Darling came into the Treasury in that month. The new system of taxing banks introduced by George Osborne, the bank levy, provides the tax receipts to the Treasury over the course of the financial year.
However, the figures still represent bad news for the coalition government as it attempts to reduce the deficit. The figures caught analysts off guard as many expected the borrowing figure for April to be around £6.5billion. It also reflects the downturn in sales on the High Street as you would have expected the March quarter to supply higher VAT income to the Treasury.
The total government borrowing figure has now reached £910.1 billion or 60.1 per cent of GDP.
There is good news however as the total borrowing figures for the 2010-11 financial year has been downgraded to £139.4 billion from £141.1 billion providing some welcome news for the Chancellor and the coalition government. The downward revision was mainly due to increased VAT revenue after the VAT rate increased to 20 per cent from 17.5 per cent in January.
The April borrowing figures were a surprise to many economic experts as the impact of government spending cuts took effect. In addition a decrease in government spending was expected as previous stimulus measures designed to boost the economy came to an end.
As I've said before the 2010 and 2011 budgets show that the plan is a long term one, this isn't a quick fix for all the things that were broken in the last term of the outgoing administration, however given the disappointing figures for the year to date it would be a brave man who stuck to his plans throughout the course of this Parliament.