The UK government is faced with a growing budget deficit that is expected to go beyond previous projections, official figures suggest.
The UK Office for National Statistics announced Thursday that despite a fall in public borrowing last month, deficit reduction in the first three months of the 2016-2017 financial year was slower than what former chancellor of the exchequer George Osborne had projected in his March budget.
In June, public borrowing stood at £7.8 billion, down from £10 billion in the same period last year and significantly less than London’s own £9.5 billion prediction.
However, public sector net borrowing, which is preferred by the government in measuring deficit, amounted to £25.6 billion between April and June 2016, a slight drop from £27.9 billion in the same period last year, according to the ONS.
This means that with the current rate, the deficit would reach £70 billion by the end of the current fiscal year, much higher than the Office for Budget Responsibility’s £55 billion forecast.
This is while the Chancellor of the Exchequer Philip Hammond said last month that the country’s economy was in a good enough shape to endure the aftermath of the June 23 vote to leave the European Union (EU).
Analysts say leaving the bloc would slow down the UK’s economic growth and lead to severe cuts in public finances.
This is what Osborne had warned about in the lead-up to the EU referendum, hoping to scare off Leave voters by offering a “punishment budget” that included a £30 billion package of tax hikes and spending cuts.
However, Hammond offered a more optimistic outlook, saying that June’s monthly borrowing – lowest figure since 2007-- showed “the underlying strength of the British economy.”
“As our economy now adjusts to reflect the referendum decision, it is clear we will do so from a position of economic strength,” he said.
The Bank of England, which had warned of economic chaos in case of a Brexit, admitted this week that it saw “no evidence” of a sharp economic slowdown.