Public borrowing lower than expected

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The Independent Online

Britain's creaking public finances received some relief today as official figures revealed public borrowing increased by a lower-than-expected £16.8 billion in December.

The figure, which excludes financial interventions by the Government, was a marked decrease on the £21 billion borrowed a year earlier, according to the Office for National Statistics.

Total public borrowing for the year to date now stands at £118.4 billion, the ONS said. The Government's target is £149 billion for the financial year.

Economists were expecting borrowing to hit £21 billion in December, so the lower-than-expected figure will ease fears that borrowing was in danger of overshooting forecasts set by the tax and spending watchdog, the Office for Budget Responsibility.

A spokesman for the Treasury said that while public borrowing in December came in below estimates, the Government's deficit-busting austerity measures, which include £81 billion-worth of spending cuts and the hike in VAT from 17.5% to 20% brought in this month, were still vital.

He said: "While December borrowing was lower than the same month last year and below market expectations, the UK still borrowed nearly £17 billion in one month.

"Today the International Monetary Fund (IMF) has identified failure to implement credible fiscal consolidation plans as a risk to growth in the advanced economies, which is exactly why it is vital the Government sticks to the course set out in the June Budget by dealing with the deficit."

While Government spending was up from £49.3 billion in December 2009 to £51.9 billion in 2010, taxes also increased from £37.8 billion to £39.3 billion.

Net debt is now £889.1 billion, which represents 59.5% of gross domestic product - the highest figure since records began in 1993.