EDEN Council is facing a loss of £500,000 in its current accounts, bosses have revealed.

Coun Keith Phillips, leader of the council, blamed the shortfall on the state of the economy and a drop of income from investments, due to dramatic falls in interest rates.

He said: “Taken together this means that the council’s financial position has worsened significantly.

He said that even with a proposed £250,000 investment from supermarket Sainsbury’s through the Penrith New Squares scheme, the council was facing a budget deficit next year of more than £500,000.

A new resource plan has been put together by the council’s director of finance, David Rawsthorn, and councillors are to be asked if the authority should progress with proposals for the future of the Penrith New Squares development, a planned extention of the town centre.

Coun Phillips said: “The council took difficult decisions last year to address the deficit but the drop in interest rates, reduction in income from fees and charges and uncertainty over Government grant funding has meant that the council’s position next year is very serious.

“We face uncertain financial times.”

Kevin Douglas, chief executive, said: “The main impact will fall on discretionary service areas as the Council must balance its budget.

"The Council must address the position during next year and once a decision on Penrith New Squares is made, it will be able to decide on the appropriate course of action.”