A record "black hole" in public finances and a sharper than expected contraction in the economy emerged today as the two key factors marking the scale and the cost of the economic recession in Britain, dpa reported. In its 2009/2010 budget, presented to parliament Wednesday, the government conceded that it is deep in the red with public sector borrowing expected to hit a record 175 billion pounds (255 billion dollars) this year. The dizzying scale of the borrowing figures was flanked by a sharp downward revision in growth forecasts, with negative growth of 3.5 per cent now predicted for this year - compared with growth forecasts of 2.5 per cent just a year ago. Presenting the budget, the Chancellor of the Exchequer, Alistair Darling, acknowledged that Britain was facing the "deepest recession since the Second World War." Public sector net borrowing will amount to 12.4 per cent of gross domestic product (GDP) this year, and fall slightly to 173 billion pounds in 2010, said Darling. However, he expected that the current state deficit would be halved within four years and that the British economy would "grow again by the end of this year." Darling's prediction that the British economy could return to a growth rate of 3.5 per cent by 2011 was dismissed as being too optimistic by analysts. "We suspect 3.5 per cent is far too optimistic for growth in 2011, especially given the very substantial fiscal tightening that will be required," said Howard Archer, a City economist.
