21 January 2004, 15:06  UK budget deficit widens in December

The UK budget deficit widened by 13pc in December 2003 compared to the same month a year earlier, according to National Statistics. The public sector net cash requirement rose to STG13.1bn from STG11.6bn. This is slightly higher than expectations and up on November's STG5.7bn. Public sector net borrowing (PSNB) - the government's preferred measure of the public sector's financial position - stood at STG5.3bn in December, compared with STG8.0bn in November and STG4.5bn in the same month a year earlier. Chancellor Gordon Brown raised his borrowing projection for 2003/4 to STG37bn in last month's pre-budget report. In the fiscal year to date (April-December) the government has already amassed a PSNB of STG36.1bn. However, January traditionally sees the coffers boosted as self-assessment returns flow in to the Inland Revenue and corporations pay the bulk of their taxes. Brown remains confident that the government will meet its golden rule of balancing the budget, excluding investment, over the economic cycle. Yesterday, the government rejected a warning from the OECD that the UK government needs to curb spending increases or else it will need to hike taxes to balance its books//www.fxcentre.com

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