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UK public borrowing hits record high in Nov

LONDON - Britain’s public sector net borrowing hit its highest ever monthly level in November, taking total outstanding net debt to a record 60.2 percent of economic output, official data showed on Friday.

However, in a sign that the snowballing deterioration in Britain’s public finances may be starting to ease, monthly tax receipts showed a year-on-year increase for the first time since September 2008.

The Office for National Statistics reported that public sector net borrowing rose to 20.315 billion pounds ($32.9 billion) in November, well over the more comparable 15.453 billion figure for November 2008.

Borrowing since the start of the fiscal year in April is now 117.290 billion pounds compared to 57.003 billion for the same period in 2008, and total debt is now over 844 billion.

But despite the rise in monthly government borrowing to its highest level since equivalent records began in January 1993, the increase was less than the jump to 23 billion pounds that economists had expected, limiting adverse market fall out.

“The UK’s public finances have deteriorated further in November but not as badly as the market had feared,” said James Knightley, economist at ING.

“Certainly the better labour market data is helping the government finances and return to growth will help moderate the rate of deterioration. However, the deficit is still likely to exceed 13 percent of GDP this fiscal year.”

The number of Britons claiming unemployment benefit unexpectedly fell in November, and most economists expect the economy to grow in the final quarter of the year.

Political football

Britain’s public finances are high up the political agenda with a national election due by June and the opposition Conservatives warning that the country is in danger of losing its triple-A sovereign debt ratio.

Finance minister Alistair Darling last week revised up his prediction for government borrowing this fiscal year to a record 178 billion pounds, or 12.6 percent of GDP, from an initial estimate of 175 billion pounds.

Britain’s finance ministry said Friday’s data was in line with this forecast.

“November is typically a month with a large deficit, but today’s figures also show the first increase in year-on-year cash tax receipts since September 2008,” a spokesman said.

Total receipts in November were 30.603 billion pounds, up from 29.540 billion in November last year, with year-on-year rises in all main sources of revenue apart from income tax and national insurance payments.

Other figures on Friday were less encouraging about the prospects of a strong return to growth to fill government coffers.

Bank of England data showed the flow of lending to British businesses fell for the ninth straight month in October as firms continued to pay down debt, and the Council of Mortgage Lenders said gross mortgage lending fell 14 percent year-on-year.

Pollsters GfK NOP said consumer confidence fell in December for a second consecutive month, the first time since July 2008 that confidence fell two months in a row.

Analysts are still worried about a lack of detail on what spending cuts and tax rises will be made alongside this.

“A slight undershoot of the forecast is not going to allay anybody’s concerns about the deeply troubling medium-term outlook. They’re awful numbers,” said Brian Hilliard, economist at Societe Generale.

The public sector net cash requirement rose to 14.671 billion pounds from 6.617 billion pounds, the highest for a month of November since records began in April 1984. Analysts had forecast PSNCR of 17.5 billion pounds.

The public sector current budget deficit rose to 16.190 billion pounds — the highest for a month of November since records began in April 1998 and the highest for any month since May 2009.