The truth is that the country is stuck with a deficit of a little over 3 per cent of GDP and the Chancellor can do little about it.That seems to me to be the big reality we have to face. But he can just about maintain that he is still within his own golden rule of borrowing only for investment over the economic cycle. But the very good tax receipts of last year seem to have been a flash in the pan.My own reading of this is that the worry is not so much this year but rather the next, and the years beyond that. The Chancellor will be embarrassed, insofar as that is in his nature, by missing his pre-election growth forecast by such a big margin. That may simply be a bad month, but on a three-monthly basis income tax revenue is only up 1.7 per cent on the previous year.
We are not yet back to the negative territory of 2002 and 2003, when income tax receipts were stagnant or falling (see right-hand graph). Neither company has made any announcement about the value of any deal.But it is likely that a bid as low as 600p would disappoint the board of Scottish Power, led by chief executive Ian Russell. Hitesh Patel, a partner at KPMG Forensic, says the police already have the power to search personal electronic devices that they suspect may hold information germane to a case. And the courts have shown they are willing to give orders to allow home computers to be seized and searched.Technology has moved on in the investigative world. The probes into malpractice on Wall Street by Eliot Spitzer, the New York attorney general, retrieved emails sent by top analysts that described companies they were recommending as a "piece of crap" This was despite the emails having been deleted. The "got to spend it now or it may be taken away" mentality will be immediately recognised by anyone familiar with the public sector.
Growth in spending is now running at 7 per cent a year on a three-monthly basis, instead of the planned increase of 5.6 per cent, so there may have to be a winter clampdown.But at least the Government can control its spending It has less control over its revenues Some forms of tax seem to be bringing in the bacon fine But income tax has been disappointing Last month, revenues were down year-on-year. The deficit does seem pretty stuck at close to £40bn, as the left-hand graph shows.It is hard to see clearly quite how serious the shortfall is. To some extent, the problem is higher-than-expected spending, but this may just be departments bringing forward planned spending. For the year as a whole - that is to next April - it is supposed to borrow only (only!) £35bn. Most City commentators reckon it will overshoot by £2bn-£5bn Barclays Capital, for example, reckons on £37bn.
