U.K. public sector borrowing fell to £6.5B in October from £7.7B a year ago, keeping government on track with full-year-target of £122B
November 22, 2011
– U.K. public sector net borrowing fell to 6.5 billion pounds ($10.2 billion) in October, keeping the government on track to hit its full-year target.
The October figure released Tuesday by the Office for National Statistics was in line with market expectations, and down from 7.7 billion pounds a year earlier.
The government aims to finish the year in early April with total borrowing of 122 billion pounds. So far, the government is borrowing 1.5 billion pounds less each month than it did a year ago.
Analysts caution, however, that the deficit reduction program is likely to become more difficult as public finances feel the effects of the economic slowdown that is driving unemployment higher and the impact of the eurozone crisis.
Prime Minister David Cameron said Monday that "getting debt under control is proving harder than anyone envisaged."
Next Tuesday, the Office for Budget Responsibility will be announcing an updated economic forecast, which will guide government planning. Treasury chief George Osborne will have an opportunity to adjust strategy when he makes his autumn statement the same day in response to the new forecast.
"The government has been dropping clear hints that this borrowing forecast number is likely to be revised upwards next week because of much weaker than expected GDP growth," said James Knightley, economist at ING Bank.
Samuel Tombs, U.K. economist at Capital Economics, said the government could be forced to make further cuts in spending if it wants to keep deficit reduction on track.
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