UK Budget Deficit Widens Unexpectedly, Factory Orders Fall

Britain’s public finances deteriorated unexpectedly last month, recording their worst August in three years, and a decline in industrial orders signalled that a global slowdown is hitting the country’s economy.

Chancellor George Osborne will now have a tougher job meeting his target of reducing borrowing this year. His goal of a budget surplus in less than five years also looks increasingly hard, some economists said, as uncertainty grows about the world economy.

Britain’s headline measure of public borrowing rose to 12.1 billion pounds in August from 10.7 billion pounds a year earlier, the Office for National Statistics said. Forecasts were it would narrow to 9 billion pounds.

Since the financial year began in April, the government has borrowed 10 percent less than it did in the same period last year. But that is not enough for Osborne to be sure of meeting deficit-reduction goals he set in July, after his Conservative Party won an election.

His target is to cut the deficit to 3.7 percent of economic output, down from 5.0 percent in the last financial year.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.