UK public debt pile breaches £1 trillion barrier
Britain's total debt reaches an all-time high, but December's borrowing is lower than expected
The UK's sovereign borrowing debt pile rose above £1 trillion for the first time ever in December, official figures showed yesterday. Net debt, excluding financial interventions, reached £1,003.9bn, equal to 64.2 per cent of GDP.
The £1trn mark was breached despite the fact that public borrowing in December came in at £13.7bn, below analysts' expectations of £14.9bn. The month's borrowing was also £2.2bn below the levels of last December. Total borrowing for the current 2011/12 financial year now stands at £103.3bn, leaving the Government on course to cut the deficit to the Office for Budget Responsibility's target of £127bn, and possibly undershoot it.
But some economists warned that a return to recession could yet throw the Treasury's deficit reduction strategy off course. Today's estimate of GDP growth for the fourth quarter of 2011 by the Office for National Statistics (ONS) is expected to show a slowdown in economic activity, maybe even a contraction. "Borrowing is likely to be much harder to bring down in the coming months," said Vicky Redwood of Capital Economics. "We would not bank on the underlying trend in borrowing continuing to improve as much as seen recently".
Some analysts also suggested that December's figures might have been temporarily inflated by strong VAT revenues and the Government's bank levy. "The January figures will be crucial in assessing whether the full-year target will be met," said Nida Ali, economic adviser to the Ernst & Young Item Club. "The year-on-year figures will no longer be flattered by the change in the VAT rate, while we will also be able to see the degree to which the 2011 slowdown hit corporation tax receipts."
The ONS figures showed that weaker spending growth has been the main factor bringing borrowing down. But tax receipts growth has also accelerated in recent months. The Government said that the size of the UK's sovereign debt pile was a reflection of the overspending of the previous Labour government. "That our national debt has reached more than £1trn simply shows the unsustainable level of spending this country built up over the past few years, and shows why it is critical for our nation's future that we deal decisively with the deficit," said a Treasury spokesman.
Rachel Reeves, shadow Chief Secretary to the Treasury, pointed out that the Government has already admitted it will borrow considerably more over the present Parliament than the Chancellor originally intended when he set out his emergency Budget in June 2010. "The Government is only on course for borrowing targets that are already a staggering £158bn off track, meaning David Cameron and George Osborne's promise to balance the books by 2015 now lies in tatters," she said.
The decent performance of the UK's public borrowing figures, despite the weakening of business surveys and labour market indicators in recent months, has been something of surprise to economists. "One possible explanation for this discrepancy is that nominal growth has remained strong, even as real growth has weakened," said Kevin Daly of Goldman Sachs.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 4 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
Oscar de la Renta dead: Legendary US fashion designer dies after long cancer battle aged 82
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
Super-sized ships arrive in Britain: How big can they get?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...