Hong Kong will next year post its first fiscal deficit since the Severe Acute Respiratory Syndrome crisis in 2003, as the government on Wednesday unveiled a spending spree on the back this year’s record $15bn surplus.

The plethora of tax concessions and handouts announced by Financial Secretary John Tsang in his maiden budget would lift public expenditure from 15.9 per cent of gross domestic product to 19.2 per cent in next year, and result in a HK$7.5bn ($1bn) deficit for 2008/2009.