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Britain's borrowing a stark reminder
September 22, 2010, Wednesday
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BRITAIN'S public sector borrowing soared to 15.9 billion pounds (US$24.7 billion) in August, a record for the month and well above analysts' estimates, official data showed yesterday. The August borrowing compared to 14.1 billion a year earlier, the Office for National Statistics said.
The unexpectedly large figure is a stark reminder of the challenge the government faces as it prepares to announce its plans for spending cuts next month.
"August's overshoot clearly casts some doubt on the ability of the government to meet the June budget projection of annual borrowing of 149 billion pounds," said Samuel Tombs, economist at Capital Economics.
He said it was disturbing that borrowing climbed despite stronger than forecast growth in the economy in the second quarter.
The figures for the first five months of the fiscal year were slightly more encouraging for the government, with total borrowing of 58.1 billion pounds compared to 61.9 billion pounds a year earlier.
"We do not draw any strong conclusions from today's news regarding the medium-term outlook for the deficit, which the evidence so far suggests will come in a little below the full-year forecast of 149 billion pounds," said Simon Hayes at Barclays Capital.
"However, this record level of borrowing will keep the pressure on the government to press ahead with its ambitious deficit reduction plan."
The unexpectedly large figure is a stark reminder of the challenge the government faces as it prepares to announce its plans for spending cuts next month.
"August's overshoot clearly casts some doubt on the ability of the government to meet the June budget projection of annual borrowing of 149 billion pounds," said Samuel Tombs, economist at Capital Economics.
He said it was disturbing that borrowing climbed despite stronger than forecast growth in the economy in the second quarter.
The figures for the first five months of the fiscal year were slightly more encouraging for the government, with total borrowing of 58.1 billion pounds compared to 61.9 billion pounds a year earlier.
"We do not draw any strong conclusions from today's news regarding the medium-term outlook for the deficit, which the evidence so far suggests will come in a little below the full-year forecast of 149 billion pounds," said Simon Hayes at Barclays Capital.
"However, this record level of borrowing will keep the pressure on the government to press ahead with its ambitious deficit reduction plan."
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