UK Budget Deficit Widens As Govt Spending Rises
The UK budget deficit increased in August on higher expenditure amid subdued income growth, data from the Office for National Statistics showed Friday.
Public sector net borrowing, excluding public sector banks, rose by GBP 2.4 billion from last year to GBP 6.8 billion in August. Borrowing was expected to fall to GBP 3.4 billion.
This was the largest August borrowing for two years and the first annual increase for August in three years.
Current receipts climbed 1.6 percent to GBP 55.6 billion, while total expenditure rose 6.9 percent to GBP 60.4 billion.
At the end of August, public sector net debt excluding public sector banks totaled GBP 1.78 trillion or 84.3 percent of gross domestic product. Debt increased by GBP 15.9 billion from a year ago.
Debt, excluding Bank of England, decreased by GBP 28.7 billion to GBP 1.58 trillion at the end of August.
In the current financial year-to-date period, PSNB excluding interventions was GBP 17.8 billion, which was GBP 7.8 billion less than in the same period in 2017. This was the lowest year-to-date borrowing for 16 years.
Despite the higher than expected shortfall, the government is on track to undershoot the GBP 37 billion target set by the Office for Budget Responsibility.
The fiscal watchdog is likely to revise its forecast down in November, giving the Chancellor room to deliver the promised increase in health expenditure without having to increase taxes or make cuts elsewhere, Andrew Wishart, an economist at Capital Economics, said.