Surprise deficit raises risk of more UK austerity

© Khunaspix Dreamstime.

News of a shortfall in UK tax revenues and higher than expected state spending in July has fuelled the debate about whether the coalition government’s policy of reducing the country’s record deficit is still viable or whether it should take advantage of record low borrowing rates to stimulate economic growth.

With a survey from the CBI showing that this month manufacturers recorded the worst decline in orders since December, is it time for a change of plan?