UK borrowing "set to overshoot forecasts" despite slight October fall

The UK's public sector net borrowing was £7.7bn in October, down £200m against the same month a year ago, according to official figures.

But public sector net borrowing excluding public sector banks (PSNB ex) from April to October 2014 was £64.1bn, up £3.7bn against the same period in 2013/14, the Office for National Statistics (ONS) said.

Strong growth in VAT receipts was responsible for the small improvement in the year-on-year figure.

But Capital Economics said the data showed the much-vaunted UK economic recovery was not bringing about the expected improvement in the public finances.

The group's senior UK economist Samuel Tombs highlighted that the running total of borrowing this year of £64.1bn was still 6% higher than it was last year.

"So, in order for borrowing to be 12% lower this year as set out in the March Budget, it would have to be a whopping 40% lower than last year in the remaining five months of the fiscal year," Tombs said.

"Even though there should be a bumper batch of self-assessment tax receipts in January and government departments are reportedly being ordered to underspend relative to their budgets, a reduction of this scale now looks impossible to achieve."

The ONS data also showed that the central government net cash requirement (CGNCR) from April to October 2014 was £56.2bn, up £20.3bn versus the same period in 2013/14, largely due to cash transfers from an asset purchase facility being £20.2bn lower in year-to-date 2014/15 than in the same period in 2013/14.

Public sector net debt excluding public sector banks was £1.45bn or 79.5% of GDP in October 2014, up £97.1bn compared with October 2013.