The annual deficit predicted, by budget was £163bn (12% of GDP and worse than Greece). However Britain’s deficit last year (2009/10) was actually £145bn – just over 10pc of GDP.
Tax receipts were better than expected, helped by an improvement in economic growth, and bank profitability.
A budget deficit of 10% of GDP is hardly cause to be smug. It is still a record peace time deficit. But, it does make the UK's situation better. It also shows:
- The importance of economic growth in reducing deficit.
- The difficult of predicting government borrowing, especially during recessions.
- This may be a sign that the borrowing is more cyclical than previously thought.