The City was disappointed by the figures, which showed that the Government borrowed pounds 36.5bn in 1992/3. This was pounds 1.4bn more than the Red Book forecast and well over twice the pounds 13.8bn PSBR in the previous year. The overshoot helped to push long- dated gilts prices lower, with the 9 per cent stock due 2008 falling pounds 1 8 to pounds 1069 32 , yielding 8.27 per cent.
Stephen Dorrell, the financial secretary to the Treasury, said it was not unusual for the PSBR for the last month of the financial year to differ from the Budget forecast - the average error over the past 10 years is pounds 1bn. March is often the month in which the PSBR is largest, because few tax revenues flow in while items of departmental spending are pushed through before the year-end.
'There is nothing in today's figures which would lead me to substantially revise the borrowing projections we have made for the year just starting', Mr Dorrell added. The Treasury forecast a pounds 50bn PSBR for 1993/4 in the Budget, some 8 per cent of national output. Independent forecasters expect the figure to be around pounds 48.5bn.
The PSBR has widened as the recession has pushed up the cost of social security benefits and depressed tax revenues. Departmental spending was 14 per cent higher last year than in 1991/2 at pounds 234.7bn, while revenues were nearly 0.5 per cent lower at pounds 200.7bn. Economists are worried that much of the Government's borrowing may be 'structural' - the kind that does not disappear automatically as the economy recovers.
Some pounds 800m of the overshoot in March was the result of unexpectedly high departmental spending, half of which was accounted for by payments to the EC. Spending by local authorities and public corporations accounted for a further pounds 500m, while tax revenues fell pounds 200m short of expectations. This was offset by an interest bill pounds 100m less than forecast.
Proceeds from the final call on the sale of BT shares reduced the March PSBR by pounds 1.4bn. The PSBR for the full financial year, excluding privatisation proceeds, was pounds 44.6bn, up from pounds 21.7bn in 1991/2.