UK Plunges into Red: "Faces Bigger Debt Crisis Than Greece"

by Christina 123 | February 18, 2010 at 03:17 pm

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Official figures sent the pound sliding yesterday as it was revealed the government had borrowed £4.3 billion in January. Normally in January, annual tax revenues push the Exchequer into the black. It is the first time there has been a deficit in January since 1993.

Leading economists are warning that unless the Government acts more decisively, there could be a crippling Fiscal crisis in Britain.

Economists said that the scale of the shortfall in the budget could this year mount to above £180 billion – higher than even the Chancellor’s forecast of a record £178 billion.

Such a deficit would, at 12.8 per cent of British gross domestic product, be even greater than the deficit faced in Greece, which is facing a full-scale fiscal crisis and may need to be bailed out by fellow euro nations or the International Monetary Fund.

The public borrowing figures coincided with further bad news from the housing market, as the Council of Mortgage Lenders reported that mortgage lending dropped last month by 32 per cent, hitting the lowest monthly total in a decade.