British Economy Horribly Out Of Balance - Cable

10.44.06am BST (GMT +0100) Mon 20th Oct 2003

Public sector finance figures out this morning, show the Government could be on course for a deficit double the size of that predicted in the Budget this year. Figures from the Building Societies Association show that 'net advances' are over double their level a year ago.

Vince Cable MP, Liberal Democrat Shadow Chancellor, said: "These figures demonstrate that the British Economy is horribly out of balance. With the serious shortfall in investment and export growth, the economy is being kept going by public and consumer spending."

"Public spending is sustainable in the short-term, as the debt-GDP ratio is comfortable, but consumer spending, fuelled by mortgage lending and equity release, is certainly not sustainable."

"The Building Societies' figures suggest that people would be brutally exposed if there were a serious downturn in the Housing Market."

"Last week's comments by Ed Balls suggest that the Government is at last awake to the dangers of excessive lending and debt, but it has no robust system for dealing with the banks and building societies to reign the lending in."

Notes to editors.

1. September's Public Sector Net Cash Requirement was £8.6bn - £3.3bn higher than in the same month last year and £2bn higher than City expectations.

2. The Current Budget deficit for this year so far is £16.2bn - compared to a full year deficit of £8bn predicted in the Budget.

3. Tax revenues have overall grown by less than 6%, compared to Budget predictions of almost 8%. Income tax revenues in September 2003 were lower than in September 2002.

4.Today's Building Society Association figures show that 'net advances' are over double their level a year ago. All other headline indicators released this morning showed rapid growth in lending by Building Societies.