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Thursday, 19 November 2009

"Today my bird flew away" (October Song)

October is never a great month. It is when the weather starts to get cold, the nights are noticeably darker and it just has that bad feeling about it. But this year it has the added badness of being the worst ever October for the government finance, suffering a much bigger than expected shortfall of £11.4 bn, according to the ONS. The official national debt, you know, the one with all the unpleasant bits taken out, soared to 59.2% of gross domestic product in October, the highest since records began in 1974/75.

Worse still, the Bank of England has reported that the flow of lending to British businesses contracted for an eighth consecutive month in September as firms continued to use funds raised on capital markets to pay down bank debt. The central bank's Trends in Lending report showed lending to businesses fell by £4.6bn in September. That was more than the £1.1bn contraction in August but less than the record £15.6bn contraction in July of this year.

Even worse for the government, but good news of sorts for those of us still living in the land of the sane the OECD has warned Alistair Darling that he cannot afford pre-election a giveaway.

What the government will do is publish a draft Fiscal Responsibility Act, which given its record in mangling the public finances is like asking Fred West and Dr Crippen to have a bash at knocking out a redraft of the Offences against the Person Act.


Angry Walrus said...


I had a look at this months debt in various interesting ways.


Alex said...

Very interesting. I liked the perspective on buying one third of Tescos with 3 month's budget deficit.

There are some left-wing thinkers who put all the government's woes down to corporate tax avoidance, but if the market cap of Tesco is £33bn after all the supposed tax avoidance, that puts an absolute cap on the one-off amount they could ever extract from Tesco by changing the tax laws, although in practice the real figure would be far less.