'No festive cheer' for Chancellor as November borrowing figures are published
23 Dec 2015
Public sector net borrowing for November was £14.2 billion, up by £1.3 billion compared with the same month in 2014, according to the Office for National Statistics (ONS).
The figure is higher than expected and casts doubt on whether Chancellor George Osborne will meet forecasts for this financial year.
The Office for Budget Responsibility (OBR) estimates that borrowing for the whole of 2015/16 will be £68.9 billion (excluding support for public sector banks and changes to the treatment of housing associations). However, borrowing in both October and November was higher than predicted, leading many commenters to suggest that the Chancellor will fail to meet the OBR forecast.
Paul Hollingsworth, UK economist 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.
‘If we assume that the trend seen so far this year continues, then borrowing for 2015/16 as a whole would come in at around £81 billion.’
The ONS said last November's figure was boosted by a one-off gain of £1.1 billion in fines for foreign exchange rigging, while a Treasury spokesman claimed that borrowing this November was higher because of a number of one-off factors.
In the current financial year to date, public sector net borrowing, excluding public sector banks, was £6.6 billion lower than in the corresponding period of 2014, but public sector net debt (excluding public sector banks) at the end of November 2015 was 80.5% of GDP.
David Kern, chief economist at the British Chambers of Commerce (BCC), said: ‘Although we saw a minor setback in November, gradual progress is being made with reducing the deficit. The public finances are likely to be better this year than in the previous financial year, but the improvement may not be as large as the OBR suggested in the Autumn Statement.
‘The underlying message remains that our budget deficit is still too high, and greater efforts are needed, through reducing current public spending and generating sufficient tax receipts.’