By Debt ceiling talks are inching forward, but it’s slow progress, and with uncertainty hanging in the air, gains on equity markets are being held back.
The FTSE 100 has opened lower, following on from a weaker session in Asia and lackluster trading on Wall Street.
Ballooning budgets and busted forecasts appear to be all the rage. Public sector net borrowing in the United Kingdom surged to the second highest level in April since records began thirty years ago, rising to £25.6 billion from £13.7 billion last year.
This is much higher than forecast and comes despite the economy showing signs of avoiding recession.
The money flowed less quickly into government coffers than expected, with receipts coming in below forecasts from the Office for Budget Responsibility, even though more taxpayers have been sucked into higher bands.
It’s not just the cost of the energy support scheme and rise in benefit payments causing the government a headache, but the high cost of debt interest it has had to pay is smarting.
The rapid ratcheting up of interest rates has caught the government off guard, and with another hike expected, the pain is set to be prolonged.
Moody’s has warned that social and economic conditions prevalent in the UK will mean the UK’s debt share will keep marching upwards due to aging and sicker populations.
It means the government’s wriggle room to offer extra spending is reducing fast, with the prospect of fewer sweeteners being dangled before the next election.
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