LONDON – Figures from the Office for National Statistics reveal that the UK government’s budget deficit in 2005 surpassed the limit imposed by the Maastricht treaty on Stability and Growth.
The budget deficit for the year 2005 was £43.7 billion or 3.6 percent of the total output.
This is more than the 3 percent guideline imposed by the EU regulations. The UK was in the red in 2004 as well when the budget deficit was pegged at £37.6 billion or 3.2 percent of the GDP. According to the EU guidelines, member nations are to restrict the budget deficit to under 3 percent of the GDP in the fiscal year.
Reacting to these figures, the Treasury said, “As set out in the Budget last week, the UK treaty deficit is forecast to fall to 3% in the coming fiscal year, and will reach 1.6% by 2010/11. The UK continues to have the lowest average debts and deficits of any major European economy with the public finances sustainable and increases in public investment fully affordable.”
The ONS said that the last time the budget deficit was contained to under 3 percent was in 2003. These figures for the current year are for the calendar year and the fiscal year figures are not available, but it is expected that they are in the red as well.
The budget deficit for February was also larger than expected and there is not increased pressure on Chancellor of the Exchequer Gordon Brown to increase taxes. The International Monetary Fund has said that the Chancellor is facing a mega-deficit and could have to raise taxes for as much as £6 billion.