Tuesday, December 21, 2010 8:15 PM

UK Budget Deficit Hits Record High; Cut in Public-Sector Pensions 'Non-Negotiable'; Cameron Still Too Generous

In the UK, unions are howling over Prime Minister David Cameron's plan to cut public-sector pensions. However, something has to be done as the UK budget deficit balloons to record high http://www.telegraph.co.uk/finance/econ ... -high.html

Britain's public borrowing unexpectedly hit a record £23.3bn in November, the Office for National Statistics (ONS) said on Tuesday.

The figure, which excludes financial interventions by the Government, was a marked increase on the £17.4bn a year earlier and beat the previous highest monthly borrowing record of £21.1bn in December 2009, according to the official figures.

The bigger-than-expected figure will be seen by Chancellor George Osborne as supporting the need for recent austerity measures, which include an £81bn package of spending cuts and a hike in VAT next year.

Jonathan Loynes, chief economist at Capital Economics, told PA: "Given that the economy has expanded rather more quickly than anticipated over recent quarters, we might have expected somewhat lower current borrowing, even allowing for the usual lags."

The unprecedented £5.9bn leap in borrowing was mainly due to Government spending – up 10.8pc on last year. EU contributions and spending on health and defence were particularly high last month, the ONS said, while VAT receipts dipped by 0.1pc.

Net debt is now £863.1bn, which represents 58pc of gross domestic product (GDP) – another monthly record.

Cut in Public-Sector Pensions 'Non-Negotiable'

No doubt soaring deficits were on Cameron's mind when he proclaimed Cut in Public-Sector Pensions 'Non-Negotiable'. http://www.telegraph.co.uk/finance/pers ... -says.html

The Government has ruled out a change of heart on raising public sector pensions in line with the CPI measure of inflation, saying the matter was "non-negotiable".

The Government announced in June's emergency Budget that it intended to scrap the link between public sector pensions and the retail price index (RPI) in favour of the consumer prices index (CPI). As the CPI tends to be lower than the RPI, the effect is likely to be a reduction in pensions.

Mark Serwotka, the head of the Public & Commercial Services Union (PCS), said that when he asked David Cameron at the Downing Street meeting about the switch to the CPI, the Prime Minister "said flatly it was non-negotiable".

The switch to the CPI has also been attacked by the Royal Statistical Society. Jill Leyland, its vice-president, said that, while the index was “acceptable for macroeconomic purposes