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UK 2015/16 public borrowing overshoots target, March retail sales slide
[LONDON] British public borrowing for the year slightly overshot a target set just a month ago and retail sales fell sharply, figures showed on Thursday, offering little comfort to finance minister George Osborne as he watches for signs of a slowing economy.
Public borrowing, excluding banks, fell to 74.0 billion pounds in the 2015/16 tax year, down from 91.7 billion the year before and equivalent to 3.9 per cent of national income.
This was above the 72.2 billion pounds forecast by the government's budget watchdog alongside Mr Osborne's annual budget statement on March 16.
Retail sales volumes dropped 1.3 per cent on the month in March, a bigger fall than any of the forecasts by economists in a Reuters poll released this week and matching a decline in December which was the biggest since January 2014.
Government economic forecasts have been under particularly close scrutiny this week after Mr Osborne said British households would each be 4,300 pounds a year poorer by 2030 if they voted to leave the European Union in a referendum on June 23.
Supporters of Brexit, including one of Mr Osborne's fellow Conservative predecessors, Nigel Lawson, said this precision was "spurious and entirely unbelievable" and that the government was incapable of even short-term economic forecasts.
In March's budget Mr Osborne had to admit defeat on another of his key goals - reducing national debt as a share of GDP each year - as an economic slowdown weighed on tax receipts, and later reverse plans to cut disability benefits.
Deficit reduction has been Osborne's central policy since he became finance minister in 2010 when the deficit exceeded 10 per cent of GDP.
However slow economic growth - in part due to persistent trouble in the eurozone - has made curbing borrowing a much lengthier task than Mr Osborne expected, and some economists say his austerity measures have been counterproductive.
Public sector net debt excluding banks rose to a record 1.594 trillion pounds (S$3.07 trillion) in 2015/16 or 83.5 per cent of GDP, up from 83.3 per cent in 2014/15 and slightly less than the Office for Budget Responsibility had forecast in March.
Borrowing in March alone fell to 4.8 billion pounds, well below the average 6.0 billion pounds forecast in a Reuters poll of economists and down from 7.4 billion pounds a year earlier.
There was less good news in first-quarter retail sales figures released by the ONS alongside the public borrowing data.
These showed that retail sales rose 0.8 percent in the first three months of 2016, slowing from growth of 1.0 per cent in volumes in the final three months of 2015, and the weakest calendar quarter in a year.
On the year, first-quarter sales were up 3.7 percent, slightly faster growth than in late 2015.
Industry figures for March had shown spending was flat on the year while equivalent ONS data showed them edging down by 0.1 per cent.
British consumer demand has been robust and driven economic growth over the past couple of years, buoyed by record employment, modestly rising wages and near-zero inflation, but there have been some signs of weakness more recently.
In February the BoE forecast household consumption would rise by 2.75 per cent this year, the same as in 2015 and faster than the economy as a whole would grow.