News & Current Affairs

September 10, 2008

US budget deficit seen at $438bn

US budget deficit seen at $438bn

People on Fifth Avenue, New York

Economic weakness could presage a recession, the CBO warns

The US budget deficit is expected to reach a record $438bn in 2009, according to estimates from the Congressional Budget Office (CBO).

It also warns the deficit could go higher as the figure does not take into account possible government costs for taking over Fannie Mae and Freddie Mac.

The CBO added the US government will run a deficit of $407bn this year.

During the next fiscal year – starting on 1 October – a “turbulent” economy would cut revenues, the CBO warned.

‘Increase in spending’

The CBO estimate for 2009 does not include the possible costs of rescuing the two stricken giant mortgage firms, which was announced on Sunday.

Its assessment of $438bn would breach the 2004 record of $413bn and far outstrip the $161bn budget shortfall last year.

“The significant expansion in the deficit is the result of a substantial increase in spending and a halt in revenue growth,” the CBO report said.

In 2008, the CBO estimates, federal spending will be 8.3% higher than it was in 2007; at the same time, total revenues will be less than they were in 2007.

‘Past recessions’

At a news conference, CBO director Peter Orszag said it was too soon to say whether the US officially is in a recession.

But he said that the recent rise in unemployment and economic weakness “are consistent with the pattern seen in past recessions, the past few recessions to be precise”.

He also said CBO’s budget estimates did not take into account possible costs related to the US government for taking over Fannie and Freddie.

But he said the cost of the operation should be directly incorporated into the federal budget, which could further swell deficits.

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August 14, 2008

Spending on communications falls

Spending on communications falls

Person using mobile phone, PA

Mobile use has doubled in five years, Ofcom says

Britons are spending more time using communications services but paying less for them, says an Ofcom report.

Every day in 2007, the average consumer spent 7 hours and 9 minutes watching TV, on the phone, using the internet or using other services, it says.

Since 2002, mobile use has doubled and PC and laptop use has grown fourfold, says the watchdog’s annual review.

But the average UK household spend on communications in 2007 was £93.63 a month – a fall of £1.53 on 2006.

TV remains the most popular pastime, with the average person watching for 3 hours and 38 minutes a day last year.

In 2007 the average person in the UK spent 24 minutes per day on their computer and 10 minutes using their mobile.

Graph showing household spend on communications services between 2002and 2007

Ofcom’s annual communications market review notes that monthly spend on communications has fallen for three years in a row.

Ofcom says consumers are getting increasingly canny about the way they buy services, switching providers or paying one fee for a bundle of services.

COMMUNICATIONS FACTS
Communications industry revenue topped £51.2bn in 2007
Average households spend £93.63 per month on communications services
87.2% have digital television
80% of new TV sales are high-definition sets
40% buy communications services in a bundled package
44% of adults use text messaging every day
36% of adults use the net every day
Source: Ofcom market review

Lower prices for broadband are one factor, with the average household spending £9.45 for an internet connection in 2007 compared with £9.87 in 2006.

Fierce competition between broadband providers is causing some concern that it may be difficult for the industry to raise the investment needed for faster networks.

But the report shows that broadband take-up is continuing to grow both at home and on the move.

By the end of 2007, Ofcom found, 58% of homes had broadband, compared with 52% a year earlier.

Dongle surge

The real surge, though, came in the use of mobile broadband after a big marketing push by mobile phone companies selling so-called “dongles”.

Between February and June this year, monthly sales of these devices, which give internet access to laptop users, rose from 69,000 to 133,000 a month.

According to Ofcom figures, two million people say they have used mobile broadband via a dongle or similar device and three-quarters of them say they use it at home as well as on the move – evidence that the mobile operators are beginning to compete with fixed-line businesses for broadband customers.

Children watching TV, BBC

TV retains its popularity despite booming net, mobile and computer use

British consumers are also spending more time on the phone than ever before, with a 21% increase in minutes spent on mobile calls.

Even fixed-line calls are holding up with Ofcom seeing just a 2% fall in minutes spent calling.

The Ofcom report paints a picture of a country where consumers are making more and more use of modern media services – from YouTube to personal video recorders – while still retaining an interest in the traditional services.

Digital television is now in use in 87% of British homes, with many having hundreds of channels to choose from. Despite the variety, 57% of viewing in these multi-channel homes is of the five main channels.

Ofcom also noted that while the amount of TV viewing is up on 2006, the longer term trend shows a slight decline in viewing.

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