UK may miss budget target

UK chancellor George Osborne is on the verge of missing his target for cutting the budget deficit in the current financial year, official data showed yesterday.

Mr Osborne, who is under fire for proposing cuts to disability welfare payments last week, is aiming to bring the budget deficit down to £72.2bn (€92.4bn) in the 2015/2016 financial year.

However, with only one month to go until the end of the tax year, the budget deficit already stands at £70.7bn, the UK Office for National Statistics said after borrowing fell less than expected in February to £7.1bn.

To meet the target, borrowing in March would have to fall to its lowest March level since 2004, the ONS said. The government said on Monday it was dropping the plan to cut disability benefits.

Separate data released by the ONS showed the country’s most widely used measure of inflation held steady at 0.3% in the 12 months to February.

British inflation sank below zero last year, pushed down by the plunge in global oil prices, and is expected to rise only slowly back towards the Bank of England’s 2% target.

The Bank of England has said it wants to see a pick-up in core inflation, as well as stronger wage growth, before it thinks about raising interest rates.

The ONS said inflation excluding fuel and other volatile prices rose by 1.2% in the 12 months to February, unchanged from January.

The ONS said that inflation was pushed down by lower prices for second-hand cars and bicycles, while food prices pushed inflation up.

There was little sign of price pressures building. Factory gate prices dropped by 1.1%.

However, UK house prices rose at their fastest pace in January since March last year, rising by 7.9% across the UK as a whole and by 10.8% in London.

Meanwhile, Scotland’s government indicated that it will block changes to income tax put forward in the UK budget and freeze rates and the threshold for higher earners.

The government in Edinburgh which took control of income-tax rates and a proportion of the revenue this year, expects the decision not to pass on the cuts will generate £1bn by the 2021-22 financial year.

“In setting out our proposals, we have balanced the need to invest in and support our public services with a recognition that many households are still facing difficult economic challenges, and with the need to grow the Scottish economy,” said Scottish first minister Nicola Sturgeon.