Public sector borrowing falls to £18.1bn

 

Chancellor George Osborne inched closer to meeting his deficit reduction targets today despite mounting fears over the strength of the economy.

Public sector borrowing, excluding financial interventions such as bank bailouts, fell to £18.1 billion in November, which is £2.3 billion lower than the previous year, and below the City's expectations of £19.7 billion.

However, this was tempered after borrowing in the previous seven months of the Government's financial year was revised upwards by £1.9 billion as a result of fresh data from local councils.

The fall in borrowing in November, which was driven by higher tax receipts amid the new levy on banks and the increase in VAT to 20%, leaves the Government broadly on course to meet the full-year borrowing target of £127 billion set by the Office for Budget Responsibility.

But there are fears that the Government's deficit reduction plans could yet be derailed amid rising unemployment and predictions that the UK's economy is on the brink of another recession.

This threatens to reduce the Government's tax income and saddle it with higher benefits bills.

The importance of the Government hitting its borrowing target was outlined by rating agency Moody's last night, which confirmed the UK's cherished AAA credit rating but that warned the Government's austerity measures needed to stay on course for it to retain it.

The Government's independent tax and spending watchdog last month increased its full-year borrowing target by £5 billion after it lowered its forecasts for economic growth.

Net borrowing in the financial year to date is now at £88.3 billion, which is £10.4 billion lower than the previous year.

Despite the progress being made, the Government's debt rose to a fresh record of £977.1 billion, which is 62.8% of GDP.

A Treasury spokesman said: "Today's figures show that the Government is making good progress on deficit reduction, with borrowing between April and November over £10 billion lower than over the same period last year.

"These figures demonstrate the coalition Government's unwavering commitment to dealing with the debts it inherited, despite the economic uncertainty in the eurozone and the heightened turbulence in global financial markets."

The figures revealed that the Government's tax haul in the month rose 7.1%, whereas its spending rose 0.8% as its austerity measures increasingly kick in.

November marked the third month in a row that Government borrowing has been lower than the previous year.

Howard Archer, chief economist at IHS Global Insight, said: "The public finances saw clear improvement in November compared to a year earlier, which is pleasing news for the Government.

"However, it seems inevitable that the public finances will be increasingly pressurised over the coming months by muted economic activity eating into tax revenues and pushing up unemployment benefit claims.

"While the November public finance data will be largely well received by the Government, there is still a very real danger that the Chancellor will before long face the difficult decision of accepting further slippage in his fiscal targets or imposing more fiscal tightening on a struggling economy."

David Kern, chief economist at the British Chambers of Commerce, expects the Bank of England to print more money under its quantitative easing scheme early in the new year to boost the growth of the UK economy and help keep the deficit reduction measures on track.

But he also urged the Government to introduce "significant policies to support growth", including a more aggressive reduction in red tape and "the earliest possible introduction of credit easing measures to improve the flow of lending to viable businesses".

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant - Dublin (based in London)

£20000 - £25000 per annum + commission: SThree: Real Staffing's Pharmaceutical...

SThree: Trainee Recruitment Consultant

£18000 - £25000 per annum + Commission: SThree: Are you great at building rela...

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before