Britain's borrowing higher than forecast due to EU budget payment

Headline borrowing was £13.1bn in the month, well above the £10.3bn in December 2013

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The Independent Online

Public borrowing in December overshot City analysts’ estimates thanks to a big hit from European Union budget contributions.

Headline borrowing was £13.1 billion in the month, well above the £10.3 billion in December 2013, with the extra damage largely inflicted by a £2.9 billion booked payment to the European Union.

The money reflects the extra contributions due to Brussels as a result of the statistical revisions of the size of the UK economy over the past decade.

However, the Treasury stressed that the contribution is an accounting charge, with no money changing hands, and that it ultimately expects to recoup around £800 million of the outlay over the coming years.

The Office for Budget Responsibility states that the net effect of all the EU budget contribution adjustments will be £900 million over 2014-15 and 2015-16 together.

From April to December public borrowing was £86.3 billion, down £100 million on the same period in 2013/14.

Analysts are expecting a big jump in self-assessed income tax revenues in January to bring the 2014/15 deficit down year on year.

"January will tell us a lot about whether the latest borrowing forecasts from George Osborne [pictured] are veering far off course already," said Rob Wood of Berenberg.

The national debt rose to £1.483 trillion, equivalent to 81 per cent of GDP.

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