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MENAFN - AFP - 21/11/2012

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(MENAFN - AFP) British state borrowing climbed in October, official data showed on Wednesday, dealing a blow to finance minister George Osborne ahead of next month's update on the coalition government's budget plans.

Public sector net borrowing soared to 8.6 billion (13.7 billion, 10.7 billion euros) last month, the Office for National Statistics said in a statement.

That compared with 5.9 billion in October 2011.

The data excludes the temporary effects of financial interventions such as bank bailouts.

Market expectations had been for public borrowing of 6.0 billion in October, according to analysts polled by Dow Jones Newswires.

Chancellor of the Exchequer Osborne is due to present his budget update, or autumn statement, before parliament's lower House of Commons on December 5.

The update will be presented alongside the latest economic forecasts from the government's independent Office for Budget Responsibility (OBR).

The OBR public spending watchdog has set the official borrowing target for the 2012/2013 financial year, which ends in March, at 120 billion. That compared with an official deficit of 121.4 billion in 2011/2012.

However, analysts warn that the annual target is now looking increasingly unlikely -- and this could spark further deficit-slashing austerity measures from the Conservative-Liberal Democrat coalition government.

"October's UK public finance figures show that government borrowing is still running significantly above last year's levels," said Vicky Redwood, chief UK economist at the Capital Economics research consultancy.

"If the OBR assumes that this trend continues, it will have to revise up its forecast for this year from 120 billion to 130 billion.

"Even if the OBR assumes that the trend improves a bit, it will still be pretty touch and go whether the chancellor will be expected to meet his fiscal rules without increasing his austerity measures further," Redwood add


 






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