UK Public Finances Hurt by Weak Tax Receipts

        By Jason Douglas and Jon Sindreu
        LONDON--Britain borrowed more in the first seven months of the financial year than it did in the same period a year earlier, as weak tax receipts continued to weigh on government efforts to close a persistent budget deficit.
        The Office for National Statistics said the shortfall between government spending and income was 7.7 billion pounds ($12 billion) in October, pushing the total amount borrowed between the start of the financial year in April and October to GBP64.1 billion, GBP3.7 billion more than the government borrowed in the same seven months last year.
        ONS data show the U.K. economy's rapid expansion this year hasn't been matched by growth in tax receipts. The economy has grown at an annualized pace of around 3% on average in 2014 yet income tax receipts were just 1.3% higher in the seven months to October, compared with the same period a year earlier. An ONS official told reporters that recent job gains appear to have been concentrated in low-paid work, where employees pay little or no tax. Overall receipts in the financial year to October were down an annual 1.2%.
        Treasury chief George Osborne put closing Britain's yawning budget deficit at the center of his economic strategy when he took power in 2010. He had hoped to balance the books before a general election scheduled for May but March forecasts from the independent Office for Budget Responsibility suggest it will take until 2018 to eliminate the deficit.
        The latest data suggest Mr. Osborne is at risk of overshooting the OBR's borrowing forecast for this financial year. The fiscal watchdog in March predicted Mr. Osborne would borrow GBP86.6 billion in the year to the end of March, yet October's data show government borrowing has already reached almost three-quarters of that total.
        Mr. Osborne's stewardship of the economy is expected to be center-stage in a general election scheduled for May. He is due to update parliament on his economic plans Dec. 3, alongside new budget forecasts from the OBR.
        Write to Jason Douglas at jason.douglas@wsj.com and Jon Sindreu at jon.sindreu@wsj.com
        (END) Dow Jones Newswires

        November 21, 2014 04:39 ET (09:39 GMT)

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