Public sector borrowing higher than expected - UPDATE
By Michael Millar
Tue 22 Jan 2013
LONDON (SHARECAST) - UK public sector borrowing came in slightly higher than expected in December, and was also up on the year before.
The numbers will increase concerns that the UK's precious AAA credit rating could come under more pressure in the coming months.
Public sector net borrowing was £15.4bn in December, compared with forecasts of £15.2bn made by economists.
The figure was £0.6bn higher net borrowing than in December 2011, when net borrowing was £14.8bn, according to the Office for National Statistics.
In the financial year to date, public sector net borrowing (excluding the transfer of £28bn of assets in the Royal Mail Pension Plan in April 2012) was £106.5bn.
This was £7.2bn higher than at the same time last year, when net borrowing was £99.3bn.
Alan Clarke, Director of Fixed Income Strategy at Scotia Bank, noted the latest figure was down from £120bn in 2010 and £130bn at the height of the recession in 2009.
"While the trend has been improving, this year has seen a relapse and underlying borrowing increasing versus a year earlier," he said.
"Pre-credit crunch in the mid noughties, we would have amassed borrowing of just under £40bn by this time of year.
"That was considered high. So we still have a long way to go to get back to some sense of normal."
Public sector net debt was £1.11trn at the end of December 2012, equivalent to 70.7% of gross domestic product.
Including the cost of support given to banks during the financial crisis, the figure rises to 140.3% of GDP.
"The recent poor public finance data are fuelling high and mounting expectations that at least one of the credit rating agencies will strip the UK of its AAA rating within the next few months," said Dr Howard Archer, Chief UK Economist at IHS Global Insight.