Britain’s underlying budget deficit widened in April, dealing a blow to Chancellor of the Exchequer George Osborne as the International Monetary Fund prepares to deliver its verdict on the U.K. economy.
The shortfall excluding temporary support for banks was 10.2 billion pounds ($15.4 billion), compared with 8.9 billion pounds a year earlier, the Office for National Statistics said in London today. The figures exclude the transfer of 3.9 billion pounds of cash from the Bank of England’s asset-purchase program last month.
The report come hours before IMF officials are due to announce the findings of their annual Article IV review. Since April, when the IMF urged Osborne to consider easing his deficit-cutting program to spur growth, the economy has shown signs of gaining momentum with gross domestic product rising 0.3 percent in the first quarter and inflation slowing in April.
We’re more optimistic on the shorter term,” said Samuel Tombs, an economist at Capital economics in London. “On the medium term, we’re still expecting pretty weak growth. We’re also forecasting higher borrowing for this year.”
Borrowing was revised lower in the fiscal year ended March to 119.5 billion pounds from a previously estimated 120.6 billion pounds. The Office for Budget Responsibility predicts a deficit of 119.8 billion pounds, or 7.5 percent of GDP, in the current fiscal year.
The public finances traditionally get a boost in April, the first months of the fiscal year, from quarterly payment of tax on company profits. Excluding BOE coupon income, tax income was flat in April on the year and spending rose 1.1 percent.
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