The ONS said the public sector finances excluding bank bail-outs - the government's preferred measure - showed a deficit of £600m, compared to a £2.8bn surplus in July 2011, following a sharp shortfall in corporation tax.
July is traditionally a month for strong income tax and corporation tax receipts and economists had been expecting a surplus of £2.2bn.
However, total receipts fell 0.8pc, driven by a near 20pc drop in corporation tax, while Government spending increased 5.1pc.
Revenue from North Sea oil and gas companies was unusually low and accounted for about £1bn of a £1.7bn shortfall in corporation tax compared to last year.
In a further blow to the Chancellor, net borrowing for April to June, was revised up by £1.4bn.
It now looks certain that Osbrone's borrowing treats are going to be wildly overshot this year. Plan A is failing badly now, as many on the left long predicted.
But what's also worrying is that corporation tax data: if profits are collapsing then whatever is happening with regard to employment at present the fall in profit will remove any incentive they have to invest and the inevitable consequence will be a spiral of decline unless the government intervenes with strong programmes of direct investment.
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Dear Richard,
I thought you would highlight the impact of Osborne’s 2% cut in the rate of corporate tax in the 2012 budget (July being the date for payments on account for 2012), especially given your battles with the tax cut lobbyists of the Oxford University Centre for Business Taxation.
The usual suspects will soon hijack the radio and TV stations blaming the fall in corporation tax receipts on everything but the cut in the rate of the tax, and the secondees from the Big 4 working for Labour will ensure that there is no discordant tune from the opposition.
I trust you will look into this (if you’ve not done so already!)
I forgot the little matter of the CFC changes!
“We will cut everything but the deficit” would not have made such a reassuring billboard, or guardian friendly, (pas de trois) coalition minded platform.
I meant to type ‘or a guardian friendly ‘,
While you could substitute any existing facsimile of a national newspaper for the word ‘guardian’, there were few as severe outbreaks of ‘cleggmania’ as occurred in their editorial meetings. The electorate did not seem to succumb.
If it’s a wrecking government then it’s doing just fine, isn’t it? And also no wonder they’re keeping that £31 billion hidden in the BofE’s Asset Purchase Facility a deep secret instead of investing it into the economy.