Major Budget Surpluses Evident in Parts of England
The City of London generates surpluses to the tune of £26.5 billion. The UK government typically uses this funding to aid other regions of the United Kingdom that are less prosperous. The ONS (Office for National Statistics) released important preliminary data for the financial year ending in March 2016. According to the results, the fiscal surplus for Eastern England, the South East and the City of London are the only regions of the UK that turned a profit in their budget.
In the UK capital, the per-person surplus amounts to £3,070, while the net deficit per-person amounted to £5,440 in Northern Ireland. These figures are for the year ending 2016. In terms of revenues per-person, the City of London tops the list at £15,750, while the North East amounted to £8,200 and Wales £7,980. The fiscal balance is the difference between total revenue and total expenditure. When the fiscal balance is positive means that expenditure exceeds revenues, and a negative fiscal balance indicates that expenditure is less than revenue.
City of London Remains Robust despite Brexit Fears
The data from the Office for National Statistics clearly illustrates that London remains a vibrant and prosperous metropolis in the UK. In 2007/2008, the City of London witnessed the complete erosion of £25 billion per year in fiscal surplus. Over the past 2 years alone, that surplus has increased to £26.5 billion, up from £18 billion. More importantly, the regions in the UK that generated the least amount of tax revenue – the Northeast and Wales performed half as well as the City of London (£15,750) in terms of receipts per person. The United Kingdom’s highest expenditure was reported in Scotland and Northern Ireland at £13,050 per-person and £14,020 per-person respectively.
Overall, the City of London did not have enough muscle to keep the United Kingdom out of deficit. In 2015/2016, the United Kingdom’s deficit amounted to £72 billion. But there is some good news on the horizon: The Office for National Statistics alluded to a shrinking deficit in 2016/2017. Sticky wages, increasing inflation rates, and lower VAT (value-added tax) receipts have hamstrung the UK economy. The latest figures seem to suggest that the UK could well narrow its deficit below £50 billion for the current year.
The GBP and General Elections on June 8
The British pound has not reacted well to the events of late. Scotland Yard is treating the Manchester explosion as an act of terrorism, and ISIS has claimed responsibility for it. As such, fears are mounting and traders are seeking safe-haven assets to bolster their portfolios. Across the English Channel, European indices have been performing strongly.
The economic data from the European Union indicates that growth is on target, despite uncertainty back in the UK, public-sector net borrowing has increased between April 2016 and April 2017. The current level is £9.65 billion, up from £8.44 billion in April 2016. The consensus forecast was £8.15 billion in deficit, but actual figures released on May 23, 2017 disappointed in a big way. This metric indicates the difference between liabilities and assets.
The general perspective is that the GBP is the worst performing of the G20. A big part of the reason for this is the strong support being shown for Prime Minister Theresa May ahead of the June election. The Tories look likely to win an overwhelming majority of seats in parliament. The Tories had a lead of approximately 20 points in April, but now it is hovering between 9 – 13 points.
The June 8 general election is largely expected to strengthen Prime Minister Theresa May’s hand in Brexit negotiations. To do so in a convincing way would require up to 150 seats in the majority. Various spread betting authorities have now forecast conservatives winning between 384 and 390 seats, down from 395 seats and 401 seats a week ago.
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About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.