Britain had an £8 billion ($13.2-billion) budget deficit in July, the largest for the month since records began in 1993, as the economic recession ravaged tax revenue and the cost of unemployment benefits surged. The shortfall compared with a surplus of £5.2 billion a year earlier, the Office for National Statistics said in London. The median of 16 forecasts in a Bloomberg survey was for a £600-million deficit. Britain last had a deficit in July in 1996. The UK will have the biggest deficit in the Group of 20 next year, when Prime Minister Gordon Brown faces reelection, according to the International Monetary Fund (IMF). Brown is urging G-20 leaders to keep up a coordinated fiscal stimulus until a world economic recovery is more certain. The Conservative opposition says spending cuts and possible tax increases are needed to bring down debt. “The next few years will be characterized by severe fiscal austerity,'' David Page, an economist at Investec Securities, said before the report. The UK deficit this year will touch 11.6 percent of gross domestic product, second only to the US gap of 13.5 percent, the IMF estimates. Next year, the deficit may total 13.3 percent of gross domestic product (GDP), almost double the 7.7-percent peak in the 1993-94 fiscal year under Conservative Prime Minister John Major.
