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UK October public finances show improvement
[LONDON] Britain's public finances improved slightly in October, official data showed on Friday, giving finance minister George Osborne hope the budget might recover at a faster pace ahead of next year's general election.
The Office for National Statistics said public sector net borrowing, excluding state-controlled banks, totalled 7.706 billion pounds (S$15.73 billion) in October, down 2.4 per cent from a year earlier.
That compared to economists forecasts for borrowing of 7.9 billion pounds.
Mr Osborne said in March he would aim to reduce Britain's budget deficit by more than 10 per cent over the following 12 months, and Friday's figures still suggest he has little scope to offer sweeteners to voters before national elections due in May.
From April through October - the first seven months of the financial year - public sector net borrowing excluding banks was 64.1 billion pounds, 6.1 per cent higher than in 2013.
Last month's data showed that borrowing between April and September was 10.3 per cent higher than a year earlier.
So far this year, Britain's public accounts have failed to benefit from the pickup in Britain's economy, mainly because of slow wage growth and large numbers of people earning less than the threshold for income tax which have kept a lid on receipts.
Receipts from income tax and national insurance contributions rose 1.5 per cent in October and were only 0.6 per cent higher in the first seven months of the financial year, despite economic growth of more than 3 per cent.
Exact comparisons between the government's budget plans and actual borrowing are difficult as ONS has changed how it calculated the headline measure of British public borrowing.
Under the old measure, public sector net borrowing excluding financial sector interventions, fell to 4.4 billion pounds in the April-October period, down 49 per cent from a year earlier.
Borrowing on this basis was forecast in March to fall to 5.5 per cent of gross domestic product in the 2014/15 tax year from 6.6 per cent in 2013/14.
Since it came to power in 2010, deficit reduction has been the central economic policy of Britain's governing coalition between the Conservative and Liberal Democrat parties, though weak growth in 2011 and 2012 has meant that it will not achieve its original plan to largely eliminate the deficit by 2015.
Mr Osborne has said that if the Conservatives win May's national elections, he will aim to eliminate the budget deficit by 2020, meaning more tough spending cuts in the coming years.
The government has said the extra borrowing so far this year is due to an uneven pattern of tax receipts in 2013 and the differences will even out before the end of the financial year.
Public sector net debt excluding state-controlled banks totalled 1.449 trillion pounds in October, equivalent to 79.5 per cent of gross domestic product.