Stabilising Britain’s finances will be painful but the government must persevere, say BCC
22 May 12
Public sector borrowing in April 2012 was -£16.5bn (a surplus) compared with £9.1bn in April 2011. David Kern, Chief Economist at British Chambers of Commerce has surveyed the figures and casts his view.
Commenting, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: “The strong improvement in April’s public finances is due to the transfer of Royal Mail’s pension fund to the public sector. This resulted in a one off reduction in public borrowing of some £28bn. Excluding this factor, the deficit last month was larger than a year ago. Eliminating Britain’s fiscal deficit remains a top priority and will present huge challenges for the UK economy. Although this is achievable, it will mean painful sacrifices for businesses and consumers, with the eurozone crisis adding to these difficulties.
“We must stick to Plan A, but it is just as important to reallocate priorities within the current spending envelope so that businesses can drive growth. Cutting regulation, supporting Britain’s exporters and increasing infrastructure spending are possible within the government’s current plan, all of which are crucial to sustaining the recovery. Furthermore, increased credibility in the financial markets provides the government with more flexibility which can be used to boost public investment.”