Borrowing down but still set to miss targets

Government borrowing fell drastically last month, figures revealed yesterday, but economists still fear it will miss deficit reduction targets for the year.

Public sector net borrowing, excluding financial interventions such as bank bail-outs, dropped to 20 million, compared with 3.5 billion in the same month a year ago, the Office for National Statistics (ONS) said.

This was substantially lower than the 2.5bn expected by the City after a rise in tax returns and a fall in local government spending.

The Office for Budget Responsibility (OBR) expects borrowing to fall to 122bn in the current financial year, compared with 142.7bn the previous year. The government has now borrowed 40.1bn so far this financial year, down on the 43.1bn in the same period the previous year.

But even though the figures were better than expected, economists still fear the government will miss the target set by the OBR, as the UK's sluggish economic growth hits tax returns.

Public sector net borrowing, excluding financial interventions such as bank bail-outs, dropped to 20 million, compared with 3.5 billion in the same month a year ago, the Office for National Statistics (ONS) said.

This was substantially lower than the 2.5bn expected by the City after a rise in tax returns and a fall in local government spending.

The Office for Budget Responsibility (OBR) expects borrowing to fall to 122bn in the current financial year, compared with 142.7bn the previous year. The government has now borrowed 40.1bn so far this financial year, down on the 43.1bn in the same period the previous year.

But even though the figures were better than expected, economists still fear the government will miss the target set by the OBR, as the UK's sluggish economic growth hits tax returns.