Just when you thought your week couldn't get any worse

Grisly borrowing figures; another ash cloud; bank downgrades - shame nobody put a super-injunction on all today's news...

by James Taylor
Last Updated: 19 Aug 2013

There's plenty of bad news flying about today, and not just if you're a Premier League star with a predilection for ex-Big Brother contestants and highly-paid briefs (that's Schillings we're talking about, for the avoidance of doubt). Official figures show that the Government had to borrow £10bn in April, a record for the month and well ahead of City forecasts. The Grimsvotn ash cloud has already grounded hundreds of flights across Europe. The Chinese have downgraded our sovereign debt. And our biggest banks are also under renewed threat of downgrade. Some might argue these are more pressing problems than our fundamental human right to know whether a footballer may have slept with a model...

The public borrowing figures are actually pretty gruesome; the equivalent figure for last year was £7.3bn, and the City was expecting a number in the region of £6.5bn. OK, so there were some distroring factors that make the number look worse than it might have done - notably the £3.5bn boost to the tax coffers this time last year from the bank bonus levy. But it's still a pretty shaky start to the financial year - and, as analysts have been quick to point it, it will make it even harder for the Chancellor to hit his ambitious target of reducing borrowing  to £122bn in 2011/12 (£30bn less than last year). Particularly if growth remains as lacklustre as it is currently.

One Chinese rating agency has already decided that the UK's ability to repay its debts is deteriorating - the Dagong Global Credit Rating Company (which has made some trenchant criticisms recently of its Western counterparts' role in failing to prevent the financial crisis) has just downgraded our credit rating to A+, suggesting the impact of the Bank of England's monetary policy and the knock-on effects of Eurozone defaults is 'likely to further worsen the government's fiscal status'. And speaking of debt downgrades, Moody's said today that it was reviewing the credit ratings of 14 UK banks and building societies, including Lloyds and RBS, because of fears of what will happen when the state withdraws its financial safety net.

A good time for a holiday, then (if you can still afford it)? Well, not so much: thousands of UK passengers have found themselves stranded at airports thanks to another pesky ash cloud, this one emanating from the (marginally easier to spell) Grimsvotn volcano. Apparently over 250 flights have already been grounded, despite the relaxation of the rules over what constitutes a safe level of ash in the sky.

Still, as you know we're eternal optimists here at MT, so we're going to leave you with one bit of positive economic news we're seen this morning: according to the Department for Business, Innovation and Skills, the number of private sector businesses in the UK at the start of 2010 increased by 48,000 from a year earlier. OK, so the Government had to revise down the 2009 figure to turn this into an increase - but still...

- Image credit: apasciuto/Flickr

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