BRITAIN’S public finances worsened unexpectedly in November as borrowings jumped to a higher-than-expected £14.2 billion and put pressure on George Osborne’s aim to balance the books by the end of this parliament.
Public sector net borrowing (excluding state-backed banks) rose £1.3bn – or 10 per cent – year-on-year in November from £12.9bn in the same month last year, the Office for National Statistics (ONS) said yesterday.
This takes the overall borrowing figure so far this financial year to £66.9bn, down £6.6bn year-on-year, but already close to the Chancellor’s target of £73.5bn for 2015-16.
The City was disappointed, the November figure being appreciably higher than the £11.1bn consensus expectation among independent economists. Howard Archer, chief economist at IHS Global Insight, said: “The Chancellor now faces a massive task to meet his fiscal targets for 2015/16 and it is frankly hard to see how he can make it.”
He added that Osborne would “need very strong UK economic activity over the next few months if he is to have even a fleeting chance of meeting his fiscal target”.
James Knightley, economist at ING, said monthly data could be volatile, but added that “barring a dramatic improvement in the trend, it (the target) is looking likely to be missed by possibly more than £5bn”.
In his recent Autumn Statement, the Chancellor said that independent forecasts from the Office for Budget Responsbility (OBR) confirmed the UK would move into surplus by 2020, while also confounding experts by revealing public sector net borrowing was set to narrowly beat this year’s target.
The OBR also handed the Chancellor an early Christmas present when it unveiled a £27bn boost to the public finances over the course of the parliament.
Yesterday’s ONS data said the comparative public borrowings figure in November 2014 had been boosted by a one-off gain of £1.1bn from financial institutions for foreign exchange rigging, which was not repeated this year.
The latest figures also revealed some improvements in tax receipts last month. Over the financial year to date income taxes are up 4.6 per cent, VAT 4.1 per cent higher and corporation tax 6.4 per cent up.
David Kern, chief economist at the British Chambers of Commerce, said: “The public finances are likely to be better this year than in the previous financial year, but the improvement may not be as large as the OBR suggested in the Autumn Statement.
“The underlying message remains that our budget deficit is still too high, and greater efforts are needed, through reducing current public spending and generating sufficient tax receipts.”