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Wednesday 20 August 2014

UK's higher debt threatens rating

Patrick Graham and Olesya Dmitracova

Published 23/01/2013 | 05:00

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THE UK government borrowed slightly more than expected in December as the economy continued to struggle, thwarting efforts to erase a large budget deficit and adding to pressure on the country's top credit rating.

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Just over a month after official borrowing forecasts for 2012-13 were revised, economists said the figures showed the Chancellor, George Osborne (right), was almost certain to miss his new annual target, further endangering a deficit-cutting drive that is already running two years behind.

The government's preferred measure of public sector borrowing rose to £15.419bn in the month from £14.848bn a year earlier, just above a forecast of £15.2bn.

It was mainly due to a poor growth in revenues, which will bolster criticism that the government has cut too hard and too fast in the public sector to allow the economy to grow.

But there were also worrying signs that, with unemployment rising, spending is growing faster than expected, by 5.4pc on the year compared with a 3.6pc rise in revenues.

There are a number of windfalls likely to flow into state coffers before the financial year ends in early April, but the most-used measure of borrowing is already £2bn short of the 2012-13 target set in December.

"We're still trying to work out how the government believes they're going to meet their borrowing requirement this year," said Tom Vosa from National Australia Bank in London.

"They still seem to be some way off from the target announced in (December)."

The Office of Budget Responsibility, a budget watchdog, said after the data it was still hopeful the target it set in December could be met. (Reuters)

Irish Independent

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