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Scandinavia Today / Europe



UK borrowing grew just as economic growth revised lower than expected

Friday, 21 December 2012
The bad news about the UK economy continued  as the UK borrowing went up last month tying to the view that the slower than expected economic growth of  0.9 percent instead of the 1 percent that had been popularly celebrated eroded rather than build the deteriorating public finances.

The British Prime Minister, David Cameron said in the Parliament on Wednesday that borrowing was down and that the economy had growth better. But this news is not going to look like a good Christmas present for the Coalition government which has been facing intense pressure from the opposition, Labour and recently from international organisations such as Standard and Poors and Moody's which have threaten to downgrade the British credit standing.

The coalition government of the Conservatives and the Liberal Democrats came to office close to three years ago on promise to "fix the mess labour left them." The former The Labour government, which is now in opposition, had defended their record that it was the unexpected economic crisis that pushed the British deficit to a record high after more than a decade of economic growth. After bailing banks that were almost destined to collapse thus saving the British financial industry, economic growth was seen during the last days of the labour government.

After the coalition took intense radical economic austerity measures to such pout capital out of the economy, the economy has remained planted in recession for two years. The UK emerged from recession in the third quarter, when the economy was lifted by what is described as the effect of London hosting the Olympic Games.

There are fears that another quarter of contraction early in the New Year could see the UK falling into a 'triple-dip' recession.

British public sector borrowing came in at 17.5billion, considerably higher than the the 16.3billion in November 2011, and way beyond forecasts for a total of 16billion. That brings borrowing for the fiscal year to 92.7billion.

The big contrast here is that the British economy was in the same place as the USA economy but the USA is clear firing up with growth up, deficits down and unemployment falling. Even house prices in the USA is going up just because Obama has held tight to some amount of stimulus in the economy.  What will the British plan B be - change of government of just change of policy?
By Team

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