Higher inflation following sterling’s slump after the Brexit vote forced the government to spend more on financing its debt mountain. Other factors included lower GDP growth in the first quarter, a fall in corporation tax receipts and a bigger than expected contribution to the EU budget in June. The deficit is already expected to rise from full-year borrowing of £46bn last year to £58bn this year. John Hawksworth, the PwC chief economist, said the chancellor would still have room for increases in public spending in the budget. “Looking beyond the current financial year, we would expect the decline in the budget deficit to resume if current tax and spending plans are maintained.

Source: The Guardian July 21, 2017 10:07 UTC