U.K. Chancellor of the Exchequer George Osborne is facing a potential shortfall in the nationâ€™s finances ahead of his annual budget as plans to sell Royal Bank of Scotland Group Plc shares stall.
Whipsawing markets and a split within the government ahead of Britainâ€™s June 23 referendum on European Union membership mean the chancellor probably wonâ€™t meet next fiscal yearâ€™s goal to raise as much as 5.8 billion pounds from selling RBS shares, according to officials, who asked not to be identified because the discussions are private. The lenderâ€™s stock has dropped more than 30 percent since the sale target was set as the company posted an eighth consecutive loss and pushed out plans to pay a
Generating less cash from selling RBS shares, as well as other potential delays to sales of assets leftover from 2008 bailouts, is another threat to the governmentâ€™s goal of balancing its budget. Osborne last month warned that he may make further cuts in public spending amid an economic recovery that hadnâ€™t advanced as he hoped.
The delay also reflects the increased political pressure on the chancellor in the run-up to the referendum. Last week, the Treasury said it dropped a plan to overhaul pension tax relief after pressure from industry groups and fellow Conservative lawmakers. On Wednesday, a proposal to extend Sunday trading hours announced in last yearâ€™s summer budget was defeated in the House of Commons after opposition from within Tory ranks.
This would not be the first share-sale target Osborne has been forced to abandon as risks to his economic and fiscal forecasts increase. Last month, he shelved plans to sell some of the governmentâ€™s stake in Lloyds Banking Group Plc to consumers.
The Treasury may revive plans to sell RBS stock in the summer, according to a Treasury official. And while the Lloyds sale would take little time to set up, market volatility in the run up to the referendum and local elections in May make it equally unlikely, as the political cost of a slump in price following a sale to retail investors would be too high, the official said.