• Public sector net borrowing in July 2012 was £0.6bn, £3.4bn higher than in July 2011
Commenting on the public sector finance figures for July 2012, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:“The small deficit in July was disappointing and larger than the market expected. The figure highlights the huge challenges facing the UK in restoring stability to its public finances. Deficit reduction is a difficult and arduous task, which will put pressures on both business and consumers over the coming years. Judging by these figures, we expect total borrowing in 2012/13 to exceed the total predicted by the OBR at the time of the March Budget by around £10bn.
“While there are many calls for the government to abandon its austerity plan, this is not the answer. To maintain credibility, we need to persevere with spending cuts, but supplement them with forceful policies to boost growth. This may mean taking some difficult choices in the months ahead. The Chancellor has persuaded the financial markets that he is determined to tackle the deficit, and now is the time for him to make use of his hard-won credibility to support growth. If the UK is to return to growth, we need to see more deregulation, increased infrastructure spending, and the creation of a state-backed business bank.”