LONDON: British tax revenues would be $38.3 billion lower by the 2019-20 fiscal year than expected, which means that instead of a surplus of $12.8 billion the United Kingdom might face an $18.5-billion deficit, according to a report by the Institute for Fiscal Studies. Lower economic growth after the Brexit vote will force the British authorities to borrow 25 billion pounds ($31 billion) more than it was forecast by Office for Budget Responsibility in March, a report published on Tuesday by the Institute for Fiscal Studies said.
According to report, British tax revenues would be $38.3 billion lower by the 2019-20 fiscal year than expected, which means that instead of a surplus of $12.8 billion the United Kingdom might face an $18.5-billion deficit. The report comes ahead of the first budget statement by UK Chancellor of the Exchequer Philip Hammond that would be announced on November 23.
The United Kingdom may face severe worsening in public finances due to its decision to leave the European Union after a June referendum. Though the formal procedure to cease Britain’s EU membership will start by the end of March 2017, the UK economy has already witnessed the consequences of that decision. On October 26, the Resolution Foundation thinktank warned Hammond of an 84-billion-pound ($102bln) black hole in public finances over the next five years, increasing debt and inflation rates, slower wage growth, falling value of the pound and rising unemployment.
The following day, the Treasury’s internal briefing document published by mistake on the government’s website revealed that the UK government would be unable to implement its deficit reduction plan due to 2.3 billion pounds ($2.8bln) deficit and a 700-million pound ($855mln) EU bill that London has to pay after the Brexit referendum.
