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Slower economic growth to dent UK finances

Slower economic growth to dent UK finances

LONDON: According to statistics from the UK’s Office for National Statistics (ONS), an expected slowdown in economic growth could lead to fiscal challenges for the UK.

Commenting on the ONS’s latest report, Suren Thiru, Head of Economics at the British Chambers of Commerce, said: “2017 is likely to be a challenging period for the UK’s public finances, with economic growth likely to soften, which will hamper the UK’s ability to generate tax receipts.”

According to the ONS report, central government receipts for the fiscal year to November 2016 were 4.4 percent higher year on year. Corporate tax receipts were up 9.7 percent and value-added tax receipts were up 2.2 percent, showing that profits and consumer consumption has risen. However, the ONS said the deficit is increasing. In November 2016, the public sector spent more money than it received in taxes and other income, it said.

“The more flexible approach to deficit reduction announced in the Autumn Statement is a sensible step given the broader uncertainty,” Thiru said. “However, the acid test for the Chancellor’s new fiscal rules will be whether they are able to reverse the ongoing shortfall in tax revenue, which has persistently hampered previous attempts to reduce the deficit.”