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Will George Osborne be concerned about the public-sector spending deficit?

A sharp spike in the public-sector spending deficit for August caught many analysts and economists by surprise although George Osborne has been fairly quiet with regards to these figures. The government will be very careful about building up concern for the future or indeed using the record August deficit to push through further public-sector budget cuts. It is also very dangerous to take one monthly figure in isolation because ultimately next month could be very different.

As a consequence, George Osborne is unlikely to lose much sleep regarding the record deficit for August although if this situation was replicated in September, October and potentially November that would be a different matter. The UK population, the UK business arena and UK investors are now falling into two very distinct groups. There are many still fighting proposed UK budget sector spending cuts while others are adamant that without public-sector spending cuts the UK credit rating could be downgraded and further issues would arise from this.

So while George Osborne will not necessarily make any adjustments to his plans or his forecasts on the back of one monthly figure, a continuation of record deficits will weaken the fight against the public-sector spending cuts and potentially cause more friction when strike action is called later in the year by the unions.

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