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Alistair Darling gets extra £20bn after public borrowing is lower than feared
Hugo Duncan18 Mar 2010
Alistair Darling was today given Budget “wriggle room” for £20 billion of pre-election giveaways amid signs Government borrowing this year will be lower than feared.
Official figures showed borrowing hit £12.4 billion in February, taking it up to £131.9 billion after 11 months of the financial year.
Economists said that barring a disaster this month — the final month of the fiscal year — borrowing will come in significantly below the £178 billion initially planned by the Chancellor.
It means Darling could have £10 billion to £20 billion to play with in next week's Budget, the last before the General Election expected on 6 May.
He will come under pressure from Gordon Brown to spend the money on pre-election handouts to boost Labour's ratings on polling day.
But City experts urged the Chancellor to use the it to cut the deficit which is still the largest in British history.
Owen James, from the Centre for Economics and Business Research, said: “All economists worth their salt are of the view that a clear and credible plan to tackle this deficit is needed.
“However, with a budget so close to the election it is likely that politics, not economics, will take centre stage.”
Ross Walker, of Royal Bank of Scotland, said: “It looks like we are going to get at least a £10 billion undershoot. In theory, it gives him wriggle room for the Budget. But the markets would prefer to see locking in of lower borrowing rather than pre-election giveaways.”
James Knightley, of ING, said: “The Prime Minister is eager for a fiscal easing to boost his chances of re-election but Darling is no doubt aware that this will probably be his last budget — if the Conservatives win Labour are out and if Labour win Brown will probably replace him with Ed Balls.
“Consequently he may not want to be pushed around by Brown and may look to his legacy as Chancellor.
“This perhaps suggests he will be keen to stand firm and be recognised as the person putting the UK's fiscal house back in order,” he added.
The £12.4 billion borrowed last month was a record for February but less than City predictions of £14.75 billion. Officials also revised January's borrowing down to £43 million from £4.3 billion.
Government coffers were boosted last month by a 3.6% rise in tax receipts to £42.6 billion as a result of the pick-up in economic activity and the reversal in the VAT reduction.
Receipts from VAT, which returned to 17.5% at the start of the year, rose 30% to £6.9 billion last month.
Reader views (26)
It's the equivalent of saying I haven't maxed out on my credit cards this month, so I better go on a shopping spree.
This is creative accounting in a desperate attempt to win the election.
We are trillions in debt. My children (if they choose to live in this country) will be paying back for this mess for years to come.
- Simon, London, 18/03/2010 23:47
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Surely this 'wriggle room' is money we dont have. It isnt there to give away as we dont have it in the first place. Surely if you are in debt and need to borrow less the first place any 'windfall' goes is debt reduction.
- Ian, Gravesend, 18/03/2010 21:32
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Well done Mr darling and Mr Brown for managing the UK economy so well despite all the hoo-hah that the Tories are making about the matter
- Keith Price, Luton, Emgland
Ahem! It means they have merely destroyed the UK economy slightly less than expected. Hardly 'managing the economy'.
- Booky2, London. UK, 18/03/2010 20:02
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I think the new government is going to find a lot of nasty surprises. These Nu labor guys do not really know what is going on and are at a loss what to do. It is clear Britain is going down faster than expected...
- Jacqueline, Hampstead, London, 18/03/2010 19:59
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How can he have money to give away?He has no money,only debt.What a mess!
- Mark A, Warrington, 18/03/2010 19:59
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Do the maths.
At present our National Debt is £800billion and it increases at the rate of the deficit year by year.
So, doing the maths, if the government reduce the deficit to half of the present forecast in (£178 billion) in 4 years time, then, it is easy to calculate that by 2014 the National debt will be £1.385 trillion increasing at the rate of £89 billion per year (or 11 million per hour)
And we're supposed to be sucked in by an 'improvement' of £20 billion?
Pull the other one.
- Anglo, Sussex UK, 18/03/2010 19:52
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So who are you as a nation working for? Some foreign World Bank and Alien Institution? Who is charging whole nations interest on money which they give them to charge interest on/money for nothing but debt credited to you to create bondage to a Capitalist System, whenever they can just print whatever every needs? Who thinks they own you and you blindly pay them to enslave you with the paper which is so easily printed.
Welcome to the greatest scam in the history of the world perpetrated on the dumbest of animals in the world so easily brainwashed not to think but to just do as they are told ....... like eager to please little infants.
Y'all are being played for fools by those who really do fear that you will discover the Great Game and its Perverse Deceptions that keep you Pauper Poor and they Filthy Rich....... for as Henry Ford said .... "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
- Amanfrommars, HereThere, 18/03/2010 19:27
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It reminds me of a loan company advert on daytime TV. "Consolodate all your debts with a bigger loan then you will have enough left for a new car and holiday"
This is just catastrophic for the future of UK plc. We should just invite the Chinese to come and take us over now.
- Richard, Cambridge UK, 18/03/2010 18:10
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Even if we undershoot slightly the truth is that our fiscal deficit for this year will be very high. As notayesmanseconomics web blog has pointed out perhaps we have fallen victim to some expectations management on these numbers. It is also slightly curious that whilst the recession was worse than expected and the employment figures show that the public-sector has expanded then the fiscal deficit is looking better too.
Perhaps something does not add up!
- Elaine Smith, Surrey England, 18/03/2010 16:50
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So let me see if I'm getting this... Darling has to borrow money and lots of it to keep the nation afloat, as he's having to borrow slightly less than expected he has 20bn to spare on bribing the electorate?? I don't get it, surely the smart thing to do would be to not borrow any more than was necessary and therefore avoid having to repay it and the interest back at a later date??? Unless its a scorched earth policy you're pursuing in the knowledge that it'll soon be the otehr guys problem...
- M, London, 18/03/2010 16:47
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How right was George Orwell everything is DOUBLE THINK. We havent got 20 billion less debt we go6 138 billion more than eleven months ago. We havent got 33000 less unemployed but 8.i million economically inactive, a big brother phrase for people who are now unemployed. Even then people like my grandson who after two redundancies has gone to Japan to seek work are not counted in that 8.i million. Repeat nearly ten million not working, who could. Yet people, some who do not even live here, argue about the merits of Brown and Darling and the rest of the Unite MPs, present and on their way in safe seats.
- Alan,, England., 18/03/2010 16:44
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Well done Mr darling and Mr Brown for managing the UK economy so well despite all the hoo-hah that the Tories are making about the matter
- Keith Price, Luton, Emgland, 18/03/2010 16:23
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They promise it all before the vote, but afterwards we see no change. If you have extra money in your pocket, and you are in DEBT pay of apart of the DEBT. Look to Europe Greece, Ireland Portugal all have similar DEBT problems. New Labour / Old Tory it's still the same old rubbish... BNP are the party offering a different way forward, there's no way out. Stop wars, stop giving POOR countries (like India) development money, E.G. India has a bigger SPACE programs than Europe, and we with other European countries give them development money why?
- Fred, London, 18/03/2010 15:33
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Does anyone really believe govt figures anymore after Browns recent denials and U turns. Remember the 10p tax band and the defence budget.
Stephen of Bexhill is spot on. Anyone who has worked in the public sector will tell you that statistics are massaged to achieve the, "result," your lord and masters want. Its been going on since the year dot.
If Darling has got some extra dosh, its courtesy of the motorist who have paid through the nose for a gallon of petrol. Its already 119p per litre here, heavens knows what it is going to be after the budget.
My only words of wisdom on the budget are not to rush to judgement. Wait for a week or two so that the fine print can be unravelled and its implications fully understood.
- Brian G, Norfolk Gorleston, 18/03/2010 15:26
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If Darling or Brown were real finance directors they would have been sacked years ago.
The bottom line is there is no spare cash for any pre-election bribes and as any primary school kid knows there is o such thinmg as a free lunch.
The electorate know with Labour what they say they give they take straight back.
There management of the economy is so dire its a shame there is no criminal case that could be brought against them.
If Darling is teh honest politician he tries to suggest he is then he will tell Crash Brown to shut it and keep any savings in the Treasury for the sake of the well being of the country nor Labour.
- Robert Marshall, LONDON, 18/03/2010 13:34
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I'm sure he'll "pay down" a chunk of the debt because it will completely null the Conservative argument. Although its actually not paying any debt back in reality as we would need to be in surplus for that.
The national debt will be more than 1 trillion pounds in 12 months time. A number that is beyond anything this little island has tried to cope with before.
- Andyr, St Ives, Cambs, 18/03/2010 13:32
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Quote: Alistair Darling was today given Budget “wriggle room” for £20 billion of pre-election giveaways amid signs Government borrowing this year will be lower than feared.
Economists said that barring a disaster this month — the final month of the fiscal year — borrowing will come in significantly below the £178 billion initially planned by the Chancellor.
When the governments borrowing; is reduced to one penny; then and only then, should he give away anything in a pre-election budget, or any other budget etc.
Anyone that is in debt, is a great big fool to give away even more money ‘’he or she’’ doesn’t have to give etc.
This is called the simple financial management of the common person, educated in a common secondary school, or being a normal housewife keeping her head above water etc.
It is true these common people do not get high bonuses for their money management skills, but they do tend to balance the books and remain debt free.
Something all future Chancellors of the exchequer, should be taught at University, if they ever reach that level of higher education.
- Mickinlondon, london, 18/03/2010 12:47
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That's it another Pre-election bribe/give away...it
won't work you numbskulls. The Electorate aren't
stupid and cannot be bought!!!!
- Mike Adams, taunton, 18/03/2010 12:43
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@ Ana Key and Tojo
Cameron can't bring in Ken Clarke because he's not Europhobic enough. The Tory right hate him.
If Vince Cable is "second rate", at least he could see the credit crisis coming. What does that make Brown, Darling and Osborne (the house flipping expenses scrounger)? Third rate?
- Robert C, London UK, 18/03/2010 12:37
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"Britain's borrowing ballooned by another £12.4 billion". That is all you need to read to be honest.
- Paul Shakesby, London UK, 18/03/2010 12:02
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"Saint" Vince cable is NOT the answer. The answer is Ken Clarke. He has been there, seen it and done it. What this country desperately needs is experience to get us out of the current mess. Darling is just a puppet, Cable is a master of the bleeding obvious, and Osborne is, well, untried and untested.
- Ana Key, London, 18/03/2010 11:59
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What has being a second rate economist at Shell got to with running the Economy?
- Tojo, Hythe, 18/03/2010 11:35
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Darling is cannot make necessary cuts as Gordon Brown has never given up being Chancellor and yet someone should tell him he, he is the PM. Yet George "not much experience" Osborne would make cuts that would leave the UK economy stone dead. Bring on Dr Vincent Cable MP who has the experience (Shell economist) to reduce the debt while not destroying any recovery. My vote in with Dr Vincent Cable the UK needs proven knowledge.
- Andrew, London, 18/03/2010 10:59
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I worked for the central government (Child Support Agency)for just over five years and during that time they used to manipulate the figures to achieve the targets.
Isn't it strange that just before a general election they show a drop in unemployment - the best since 1997?
What are they hoping for? Do they imagine the electorate will change their ways of thinking and vote labour?
All three major parties are as guilty as one another for manipulation and deceit.
Disraeli was attributed as having said 'There are three kinds of lies: lies, damned lies and statistics'.
I suppose the next thing we are going to hear is that the country is on target for sustainable economic growth.
Who on earth do they think they are kidding?
- Stephen Odonnell, Bexhill, 18/03/2010 10:43
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Am I missing something?
When Britain is so deeply in debt, -why does the Gov't insist on spending £billions on foreign wars where we can't win, and aren't wanted?
We seem determined to still play 'The World's policeman'at crippling financial cost while the rest of Europe get on with putting their own houses in order.
- Huggy, Cumbernauld Scotland, 18/03/2010 10:43
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Another Labour fiddle of the books!
- Tojo, Hythe, 18/03/2010 09:53
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