George Osborne’s plan to repair Britain’s public finances has received a fresh setback from official figures showing that the budget deficit in November was 10% higher than in the same month in 2014.
The Office for National Statistics said the gap between spending and revenues last month was £14.2bn - an increase of £1.3bn on November 2014.
Officials said that one reason for the deterioration was that last November had seen the payment of fines by financial institutions totalling £1.1bn, which had not been repeated in November 2015.
Even so, the figures came as an unwelcome shock to the City, which had been forecasting a drop in net borrowing – the government’s preferred measure of the deficit – to £11.8bn.
Shares fell after the ONS released the data amid fears that the chancellor would now struggle to meet his deficit reduction targets for 2015-16 and to move the public finances into surplus by the end of the parliament.
Borrowing during the first eight months of 2015-16 has been £66.9bn, only £2bn short of the total expected by the Office for Budget Responsibility for the whole of the financial year.
Analysts said it would require a big improvement in the remaining four months of the year to hit the OBR forecast. In the same months of 2014-15, the government borrowed £16bn.
“There was no festive cheer for the chancellor in November’s UK public finances figures,” said Paul Hollingsworth of Capital Economics. “Indeed, it now looks almost impossible for Mr Osborne to meet the OBR’s forecast for the fiscal year as a whole.”
Hollingsworth added that if the trend for the first eight months of the year continued, borrowing would total around £81bn for 2015-16. “The upshot is that, barring a Christmas miracle, the chancellor looks extremely unlikely to meet his borrowing forecasts this year.”
Samuel Tombs at Pantheon Macroeconomics said: “The public finances still are 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.”
This article was written by Larry Elliott Economics editor, for theguardian.com on Tuesday 22nd December 2015 10.29 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010