�22.77bn figure for November raises fears that George Osborne may miss budget targets for current financial year
UK government borrowing hit a record high last month, raising fears that George Osborne may miss his budget targets for the current financial year.
The public sector net borrowing requirement leapt to �22.77bn in November, its highest level since records began in 1993. The Office for National Statistics said the rise was mainly caused by increased public spending, including debt repayments.
Analysts had expected the PSBR to be close to the �17.4bn recorded in November 2009, and the surprise overshoot raised fears about the state of Britain's public finances.
"There is now a very serious risk that the government will miss its fiscal targets for 2010/11," predicted Howard Archer, chief UK and European economist at IHS Global Insight, who also warned that the situation could deteriorate further if the prolonged wintery weather hits economic growth.
"This is dire news for chancellor George Osborne to digest over Christmas and is likely to reinforce the government's belief that there must be no let up in the fiscal consolidation efforts," Archer added.
Jonathan Loynes, of Capital Economics, said the data should not weaken Osborne's determination to impose his austerity programme, but warned that the economy is unlikely to grow as strongly as the government hopes.
The Treasury said the data showed why Osborne was taking "decisive action" to lead Britain out of the "financial danger zone". A Treasury spokesman added that the data was in line with the independent Office for Budget Responsibility's forecast.
The latest OBR forecast showed that the UK deficit would fall to about �149bn this year. But Archer and Loynes both predicted that, at current trends, the PSBR for 2010-11 will hit �155bn.
For the financial year that began in April, Britain's public sector net borrowing requirement has now reached �104.4bn, compared with �105.1bn a year ago.
The ONS data showed that government income rose to �36.7bn in November, from �35.6bn a year ago. Expenditure increased to �53.9bn, from �48.6bn, with "net social benefits" up from �16.1bn to �16.8bn and interest payments rising from �3bn to �4.5bn.
Andrew Goodwin of Ernst & Young was surprised that government spending has risen so much, as the �6bn of efficiency savings announced in May should now be having an effect.
"It could well be that the spending surge is genuinely down to one-off effects and we will have to wait until next month to get a better idea. But these figures certainly dampen hopes that the strength of the rebound in tax revenues will bring borrowing in below the OBR's forecast for this financial year," said Goodwin.
If the ongoing costs of supporting the financial sector are excluded, the PSBR actually hit �23.31bn in November.
The ONS also cautioned against reading too much into one month's figures, as it lowered its estimate for October's borrowing by �1.2bn to �9.2bn.
The pound fell nearly 0.4 cents against the dollar after this morning's data was released to below $1.55.
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