Expert says public sector debt “quite likely to have negative consequences for growth”

London, 18 Feb 2010, (Travelex Global Business Payments)
Travelex Market Analysis

Bolsom says figure “challenges the fiscal reality of Darling’s forecasts”

Data published by the Office for National Statistics today showed the UK’s Public finances were much worse than expected in January, as government spending rapidly increased and tax receipts came through much weaker. The public sector debt now amounts to 59.5% of our overall GDP.

Mark Bolsom, Head of the UK Trading Desk says, “The figures are very poor and really challenge the fiscal reality of Chancellor Darling’s forecasts. They are far too optimistic, given our tentative economic recovery. He also expects tax receipts to recover a lot quicker, which is unlikely, given the rise in unemployment claims yesterday.

“This figure will only endorse the argument for full-scale spending cuts in the public sector and is quite likely to have negative consequences for growth. Unfortunately, we are about to undergo a period of fiscal austerity, whoever wins the general election.”

Sterling hit a session low against a basket of currencies. Against the dollar it slid to $1.5597, down from $1.5620 and hit a day’s low against the euro of 87.05 pence, from 86.80.

ENDS

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