Chancellor George Osborne’s plan to bring down the budget deficit was yesterday dealt another blow after it emerged borrowing unexpectedly increased last month.
Public sector net borrowing, excluding financial interventions such as bank bailouts, was £17.5bn in November, £1.2bn more than the same month last year, according to the Office for National Statistics (ONS).
Economists had predicted borrowing would fall slightly to about £16bn.
Meanwhile, updated gross domestic product (GDP) figures showed the economy did not grow quite as much as previously expected, with GDP revised down to 0.9 per cent in the third quarter of the year, from 1 per cent.
ING Bank analyst James Knightley said the borrowing figures highlighted the weak state of the UK economy, and the fact that austerity measures were failing to generate the improvement in Government finances that were hoped for.
He said: “All in all, the UK appears to be ending 2012 not in particularly great shape, and as such we suspect the Bank of England has more work to do with further policy stimulus likely in early 2013, especially if the worst fears over the US fiscal cliff materialise.”
Public sector borrowing for the year to date is £92.7bn, excluding a one-off £28bn boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 9.9 per cent more than the same period last year.
The November figures continue previous months’ trends – with Government spending outstripping tax receipts.
Total tax receipts were 0.6 per cent more at £39.1bn in October, while total expenditure rose 6.3 per cent to £55bn.
The ONS said the Treasury was looking into why income tax fell 12.3 per cent to £9.2bn last month.
The ONS added that yesterday’s figures did not take into account the transfer of assets from the Bank of England’s money printing programme into the Treasury, and the auction of bandwidth for 4G mobile broadband services, which is expected to boost the finances.