UK Borrowing Higher Than Expected

New figures published have shown that public sector borrowing in the UK last month has come out well above what economists had been expecting.

The Office of National Statistics (ONS) have shown that the total borrowing for June came to £14.5bn, whilst being a slight improvement on the same period a year earlier, it is still far more than had been expected.  Forecasts were set at around £13.1bn.

Also in the figures, the ONS have shown that the total government debt is now equivalent to 63.9% of the UK's annual economic output, this means it is at its highest level since it began being tracked in March 1993.

The pound has not struggled too much however, only falling 0.4% against the dollar, down to $1.522.

Chancellor Geroge Osborne has said, “The public finances numbers today remind us why we need to get on top of the budget deficit."

The deficit hit 11% of GDP last year.  The new Conservative-Liberal Democrat coalitions has vowed to eliminate this altogether in 5 years, and are initially planning to reduce it to 10.1% this year alone.

The figures mean that net borrowing for the year to date, thanks partially to rising tax revenues, still remains below the levels reached at the same point in 2009.

Looked at on a "cash" basis, which only counts payments at the actual time they are made, the shortfall in June was £20.bn. This was the highest monthly cash shortfall since records began in 1984, and well above analysts' expectations of only £15bn.

The borrowing number is calculated using the government's preferred "accrual" basis, which smoothes out the impact of big lumpy payments over the course of the year.

Posted at 03:13PM Jul 20, 2010 by Marc Stenton in The Economy  |  Comments[0]