THE UK’s budget deficit deteriorated in November, increasing the risk Britain will lose its top-notch credit rating and overshoot this year’s borrowing forecast.
The data – which showed public sector net borrowing, excluding financial sector interventions, hit £17.5bn last month – is gloomy news for the coalition Government.
Deficit reduction and preserving Britain’s credit rating have been top goals for the coalition of Conservatives and Liberal Democrats.
Last year, the budget deficit totalled eight per cent of GDP, and the Government’s own budget watchdog forecasts it will take until 2017 before it falls below three per cent and the Government manages to run a surplus on cyclically-adjusted non-investment spending.
Chancellor George Osborne originally planned to meet this goal by the next election in 2015, but far weaker than expected growth since 2010 now makes that look impossible.
Other official data released yesterday showed Britain’s economy may avoid a forecast contraction in the last three months of 2012, but analysts said the borrowing numbers could see the country’s credit rating revised early next year.
Howard Archer, chief UK economist at IHS Global Insight, said: “The disappointing November public finance data fuel mounting expectations that at least one of the credit rating agencies will strip the UK of its AAA rating in 2013.”
Standard & Poor’s has put a negative outlook on its triple-A rating for Britain.