Public finances in the U.K. posted the worst start to the new fiscal year on record as tax receipts dropped even as spending increased on the month, according to The Daily Telegraph. On Tuesday, the Office for National Statistics reported that public borrowing, excluding bailed-out banks, widened to £9.95 billion in April from £7.25 billion one year earlier, marking the worst April on record. Tax receipts dropped by £300 million as government spending increased by over £2.5 billion to £54.1 billion. The country’s net debt was up almost £150 billion year-over-year to £910 billion.
The ONS cited one-off factors - such as last year’s bonus tax that brought in £3.5 billion - for the decrease in tax receipts and the above-forecast level of borrowing. Hetal Mehta of Daiwa Capital Markets said, “public finances have got off to a pretty bad start this year,” adding that looming austerity cuts would make it “more likely that the government will overshoot this year’s borrowing projections,” which are for a £122 billion deficit in the year to the end of March 2012. However, the ONS said that the upwards revision of March data shows that “the government’s deficit reduction strategy is making headway in dealing with our unsustainable deficit.”
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