"The recent pick up we've had in the economy should definitely help. We should start to see some of the softer revenues that we've had pick up."
- Victoria Clarke, an economist at Investec Securities
British public sector net borrowing increased last month, leading to a first budget deficit since 2010, despite predictions of a budget surplus. On Wednesday, the Office for National Statistics said that excluding financial interventions, public sector generated a deficit of 0.1 billion pounds, figure much lower than a surplus of 2.9 billion predicted by analysts. Figures also showed that net borrowing jumped to 488 million pounds, compared with surplus of 823 million in the same month a year earlier. Underlying tax receipt surged 3.4%, lagging behind a 3.7% gain in spending. The ONS also mentioned that there is currently a constantly increasing expenditure across the board, a figure which expected to be revised in the nearest future. The fact that the economy has gathered some momentum in recent months should help Chancellor of the Exchequer George Osborne to meet his budget targets. At the same time, the Office for Budget Responsibility, predict a shortfall of 120 billion pounds for this fiscal year, a figure equal to 7.5% of GDP.
In a separate report the Confederation of British Industry said that the U.K. manufacturing sector logged the fastest growth in output since June 2012 in three months to August. The balance for export order books stood at -7%, while output volume growth climbed to 16%. Companies now expect output to increase at an even faster pace in the upcoming months, as economic growth quickens.
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