Chancellor of the Exchequer George Osborne has little scope to deliver Christmas cheer in the form of tax breaks or increased spending in his Autumn Statement next month because the UK isn't narrowing fast enough the difference between what it pays out and what it raises in taxes, according to Chief Investment Officer Haig Bathgate.

The Office for National Statistics said today net borrowing was £7.7 billion pounds in October. While that's lower than the figure for September, the shortfall between April and October was still 6.1% more than in the same period a year before.

An explanation can be found in the slightly misleading nature of our unemployment statistics. Although joblessness has been falling, many people are still in jobs that aren't paying enough, or are working part time or are self-employed, meaning they aren't as productive as they could be in a healthy economy. The result is that people still aren't spending enough and therefore tax receipts are lower than what is needed to narrow the borrowing deficit.

The fragile UK recovery is in part due to our dependence on Europe, where its recovery has been sluggish. Europe's performance stands in contrast to the US, where a more proactive response to the financial crisis – helping its banking sector overcome the financial crisis quickly and introducing quantitative easing – has helped the economy recover strongly while European policy makers have procrastinated. Still, Germany is likely to back some form of stimulus measures for the euro region soon because the tepid recovery is now affecting its growth prospects.

Haig, speaking on BBC Radio's Good Morning Scotland before today's figures were published, also commented on results at Centrica and Hornby.

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