The Guardian has an article about the UK’s soft economy. I’m not an economist, but this looks a lot like what I understand Keynes to have warned against. Austerity leads to less economic activity leads to lower tax receipts leads to more austerity, etc.
July is usually a buoyant month for tax receipts, but this year the corporate sector has been hit hard by the downturn. ONS figures showed North Sea oil and gas output has been unusually low, leading to lower profits and a cut in tax payments.
The impact of a near 20% drop in corporation tax receipts was to push government receipts down 0.8% in July on the same period last year.
Government spending, meanwhile, grew 5.1% on the previous year, mostly on welfare payments.