Borrowing rise puts pressure on Osborne’s deficit targets

George Osborne

Public sector net borrowing, excluding bank bailouts, came in at £14.2 billion last month, up £1.3 billion from a year earlier, the Office for National Statistics said. This was the biggest deficit for November in two years.

The Times reports that the figure was higher than the £11.9 billion that analysts had pencilled in and left borrowing for the first eight months of the financial year at £66.9 billion. Public sector net debt ballooned by £71.9 billion to £1.53 trillion over the same period.

Borrowing is still below the £73.4 billion recorded at the same point last year and the Office for Budget Responsibility — the chancellor’s independent fiscal watchdog — expects borrowing to reach £68.9 billion over this fiscal year.

Economists reacted to the release of the latest ONS data by warning that it looked extremely unlikely this target would be met, making it more difficult for the chancellor to achieve his goal of turning Britain’s budget deficit into a surplus by the end of the decade.

Paul Hollingsworth, at Capital Economics, said: “There was no festive cheer for the chancellor in November’s UK public finances figures. Indeed, it now looks almost impossible for Mr Osborne to meet the OBR’s forecast for the fiscal year as a whole.”

He added that borrowing for 2015-16 could come in at about £81 billion if the trend continued, although this would still be below the total of £89.2 billion for last year.

Samuel Tombs, at Pantheon Macroeconomics, said: “The public finances are still not improving as quickly as the chancellor anticipates, raising the prospect that he will have to announce additional austerity measures to achieve his goal of budget surplus by the end of this parliament.”

According to the ONS, the numbers for last year were flattered by a £1 billion fine collected by the Finan- cial Conduct Authority, while Britain paid about £1 billion more to the European Union last month than it did a year earlier.

A Treasury spokesman said: “We can see that our plan is working, with government receipts growing — stronger income tax, VAT and on-shore corporation tax — showing the benefits of a growing economy with record employment levels.”