"Government borrowing less than forecast"

vocabulary :)

VAT- Value Added Tax. A consumption tax which is levied at each stage of production based on the value added to the product at that stage.

chancellor- The British cabinet minister responsible for finance

public sector-The part of the economy concerned with providing basic government services.

http://www.investorwords.com/5230/VAT.html
wordnetweb.princeton.edu/perl/webwn
http://www.investorwords.com/3947/public_sector.html

In February, the UK government borrowed £12.4bn which was less than economists had expected, they expected the UK's borrowing in the current financial year to amount up to £178bn. As of now it only reached £131.9bn which is significantly fewer than the earlier forecast. The Office for National Statistics said that the overall effect of the latest changes to historical data for the year had cut overall borrowing for 2009 and 2010 by £2.9bn. Despite the changes and the better-than-expected figure for the month of February, government borrowing is at a record's high for the current year. The reason for this is because of the reduced tax receipts since their economy is growing slowly. Economists had worried that the borrowing figure would be much worse and damaging to the economy since the VAT has risen in the beginning months of this year. The unemployment rate has started to decrease and as a result the government is paying less in beneifts. Jonathan Loynes at Capital Economics has said that the figures has giving Chancellor Darling to stay ahead of the game and be prepared for Wednesdays budget. Economist,Howard Archer at IHS Global Insight suggests that, "Mr.Darling could significantly undershoot the £178bn public sector borrowing requirement that he forecast for 2009/2010 in last December's pre-Budget report." The UK's debt is similar to others however, they increased their borrowing during the downturn of the economy at a much faster rate than its competitors. The Chancellor promises to ultimately divide in half the budget deficit within the next four years he thinks it is to risky to do it all now and it will harm any hopes they have to get themselves from a recession. The Conservatives feel that this is should be done more quickly. The European Union thinks that halving the deficit is not enough. EU rules say government deficits must be below 3% of GDP, but the UK's deficit is expected to hit 12.6% of GDP this year. the UK debt levels have also led to concerns in recent months that the UK could lose its AAA credit rating that is reserved for the very safest borrowers. But earlier this week, Moody's agency said the UK's top rating was secure. I predict that after futher considerations of the budget and timing will be closely paid attention too and decisions will be made quickly to act now instead of pacing it over four years. I think they will gain confidence since they already over estimated that the first time and it is indeed better than they expected.

http://news.bbc.co.uk/2/hi/business/8574018.stm