Britain faces further austerity as deficit goals in doubt

Britain’s public finances veered further off track in July after a shortfall in corporation tax revenues and higher spending, putting the government’s deficit goals in doubt and raising the prospect of more austerity on top of planned spending cuts.

After nine months of recession, the unexpected deficit underscored the lack of scope for finance minister George Osborne to give a meaningful boost to the economy — which looked at increased risk of prolonged weakness yesterday as manufacturers reported a slump in orders.

The high deficit also casts doubt over the Conservative-led coalition’s plan to defend Britain’s top triple-A credit rating and hold down borrowing costs, and Osborne may soon face the unpleasant choice of more austerity or missing his goal to close the budget gap within five years.