Government borrowing rises but spending stays on target

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The Government borrowed pounds 2.3bn in November. Although this was a little more than the City had expected, it left the total for the financial year so far atpounds 4.8bn and easily on course for the Treasury's target of pounds 9.5bn for the full financial year.

Some economists believe the Chancellor, Gordon Brown, could do even better, so tough has he been at cracking down on public expenditure. Spending by government departments is down 1 per cent this year, rather than rising 1.7 per cent as forecast - and this despite inflation that has been higher than expected when Kenneth Clarke, the former chancellor, set the current cash totals for public spending.

Jonathan Loynes, an economist at HSBC Markets, said: "Barring a very large splurge at the end of the year, it now looks certain that spending will undershoot the official forecasts significantly."Adam Cole at James Capel, predicted the PSBR could be as low as pounds 5bn in the current year.

With spending reined in, lower revenues accounted for the somewhat disappointing November figure for the public sector borrowing requirement (PSBR). Total government tax receipts for the first eight months of 1997/98 were 5.2 per cent lower than the same period a year earlier.