UK November borrowing higher than expected at £12.6bn

Chancellor Philip Hammond faces a challenging 2017 as new figures show borrowing is higher than expected. Picture: John Devlin.

Chancellor Philip Hammond faces a challenging 2017 as new figures show borrowing is higher than expected. Picture: John Devlin.

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The UK government borrowed a higher-than-expected £12.6 billion in November in the first update on the UK’s public finances since the Autumn Statement.

The Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, fell by £0.6bn compared with the same month last year.

Economists were pencilling in a figure of £11.6bn.

It came as government borrowing, excluding banks, for the financial year to date – April to November – fell by £7.7bn to £59.5bn, compared with the same eight months in 2015.

A spokesman for the Treasury said: “The government has made significant progress in bringing the public finances under control, but our debt and deficit remain too high.

“That is why the Chancellor set out new fiscal rules to return the budget to balance, while creating the space to support the economy and raise productivity through a new £23bn National Productivity Investment Fund.”

Chancellor Philip Hammond has ditched his predecessor’s target of balancing the books by 2020, vowing instead to put the public finances back in the black “as early as possible” in the next Parliament as part of a new draft Charter for Budget Responsibility outlined in the Autumn Statement.

The Office for Budget Responsibility (OBR) – the government’s fiscal referee – said in November that it expects Mr Hammond to overshoot previous borrowing targets for this year, revising its outlook from £55.5bn to £68.2bn for 2016-17.

The OBR has also predicted debt to rise from 84.2 per cent of GDP last year to 87.3 per cent for 2016-17. The ONS said public sector net debt excluding banks climbed by £58.6bn to £1,655.1bn in November, equivalent to 84.5 per cent of GDP.

Howard Archer, chief European and UK economist at IHS Global Insight, said November’s fall was welcome news for the Chancellor, keeping him on track to meet his revised target for 2016-17.

“Reassuring news for the Chancellor as the public finances saw modest improvement in November compared to a year earlier – keeping the government on track to meet – or even slightly undershoot – its upwardly revised target for 2016-17 contained in the Autumn Statement,” he said.

“This is welcome for Mr Hammond as it would have been somewhat embarrassing if the first set of public finance figures after the November statement had immediately put question marks over his new fiscal targets.”

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