The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
UK Chancellor of the Exchequer Sajid Javid presided over the continued easing of austerity last month as departmental spending rose at its fastest pace for any December since 2003 — when Tony Blair was prime minister.
The 10.5% increase from a year earlier came as the government pumped money into pay rises in the state-run National Health Service. It rose 5% in the first nine months of the fiscal year, the most for the period since records began in 1997.
Britain is loosening the purse strings after almost a decade of budget cutting that has brought down the deficit to under 2% of economic output from 10% in the aftermath of the financial crisis.
The thaw began in 2018 when Theresa May, facing a public backlash, announced a long-term settlement for the NHS. The process has gathered pace under Javid, who pledged the biggest increase in day-to-day spending in 15 years ahead of the general election. A further boost will come in the March 11 budget, though the focus will be investment rather than current spending or big tax reductions.
New fiscal rules allow Javid to borrow an extra 20 billion pounds or so a year for capital spending, funded by ultra-low interest rates, but limit his room for maneuver elsewhere. The current budget, which excludes investment, is meant to be in balance in three years and Javid is now on course to meet that target by the thinnest of margins.
Election Pledge
Higher departmental spending left borrowing between April and December at 54.6 billion pounds ($71.3 billion), up 8% from a year earlier, the Office for National Statistics said on Wednesday. The deficit in December alone narrowed slightly to 4.8 billion pounds, thanks to solid revenue growth and a fall in net investment.
Prime minister Boris Johnson led the Conservatives to an emphatic election victory and the budget will almost certainly deliver on his promise of a modest tax cut for most workers. Johnson and Javid want to boost investment in areas such as broadband and transport.
to boost productivity and shore up the economy as Britain prepares to leave the European Union on Jan. 31. Much of it may go poorer parts of northern and central England, where pro-Brexit voters abandoned Labour for the Conservatives.
The latest snapshot of the public finances showed staff costs rising 7.4% and purchases of goods and services surging 10.5%. Departmental budgets are now growing at its fastest December pace since Blair‘s Labour government opened the taps 16 years ago, lifting spending by almost a quarter over the course of the year.