Is Britain the Next Greece and Spain?

February 19, 2010 (LPAC)—The British government has posted its worst borrowing figures on record for a January in what the Guardian calls "another blow to Britain's attempts to reassure other countries it is not the next Greece or Spain."

"The Office for National Statistics (ONS) said public sector net borrowing — the gap between the Exchequer's tax-take and its spending — was £4.34 billion compared with a repayment of £5.27 billion a year earlier. This is the first deficit for a January since 1993 when records were first taken. The figure was also much worse than the £2.8 billion repayment forecast in a Reuters poll by City analysts, who in previous months had largely underestimated the state of the public finances."

The Guardian comments further: "Britain's own relatively high deficit, its slow growth rate and high inflation have prompted some to speculate it could be the next country to alarm global markets. The pound weakened against the dollar and the euro and British government bond prices fell as January's borrowing shock fuelled worries about Britain's fiscal position."

The Times Online reports that the Government is on course to run up a higher budget deficit this year than Greece.

The deficit is attributed to a collapse in revenues in a month that is supposedly one for high intake.

The Daily Telegraph reports that the number of people who are neither working nor seeking employment reached 8.08 million in the last three months of 2009, the highest on record. This, out of a population of 61 million, and comprising 21.3% of working-age adults.

The Office of National Statistics reports that those seeking unemployment benefits increased by 23,500, to 1.64 million, in January, the highest since April 1997. Official unemployment is 2.46 million. This has shocked the talking head economists, who had forecast a fall of 10,000 from the unemployment rolls. This is euphemistically termed as to be pointing in the direction of a "double-dip recession."

The Independent reported that underemployment has increased by 700,000 to 2.8 million, which, it says, masks the poor employment situation in the U.K. It is worse if one considers youth unemployment, which includes those who are continuing their education because they can't find a job. Plus those already employed who are looking for second jobs.

Meanwhile, the Bank of England announced a 3.5% inflation rate for January, up from an average 2.9% for the previous 12 months. The Bank of England blamed the increase in VAT and oil prices, claiming that it will come down again in a few months. Even the Daily Telegraph was not so sure, writing, "inflationary pressures may continue to prove surprisingly persistent. Easy money globally has been boosting prices and favoring commodity price inflation. And the pound's continuing frailty brings inflation into the U.K. economy..."