LONDON – British public finances recorded the worst deficit for any October since 2009, leaving Chancellor George Osborne (pictured above) a challenge to meet his borrowing goals as he prepares a major review of government spending.
Britain’s headline public borrowing rose to 8.2 billion pounds in October from 7.1 billion pounds a year earlier, higher than all forecasts in a Reuters poll that predicted borrowing of 6.0 billion pounds.
For the first six months of the 2015/16 tax year, public sector net borrowing was 10.9 percent less than between April and October 2014 at 54.3 billion pounds.
Still, the higher than expected borrowing in October increases the chances that the independent Office for Budget Responsibility will bump up its prediction for government borrowing in the 2015/16 financial year.
Other current spending, which comprises mainly departmental spending, was up 1.4 billion pounds compared with October 2014. Debt interest payments were 0.3 billion pounds higher.
Since his Conservative Party won an outright majority in May’s national election, Chancellor George Osborne has intensified his focus on deficit reduction, and wants the country to run a budget surplus by 2019/20.
Osborne is due to publish updated budget forecasts on Nov. 25, alongside details of how government departments will cut spending by around 20 billion pounds over the next four years.
The plans are certain to be opposed by the Labour Party’s new leader Jeremy Corbyn, who said in his leadership campaign that there should be more public investment, and that there was no need to balance the budget within the next five years.
Osborne said in July he aimed to cut the budget deficit this year to 69.5 billion pounds — or 3.7 percent of gross domestic product — from 89.2 billion pounds in the 12 months ending in March.
To meet this target, Osborne needs to borrow 15.2 billion pounds from November through to March. January is usually a surplus month for government finances.
Until late last year, strong economic growth had failed to translate into much of an increase in tax revenues, but since then an increase in the number of people in work and a gradual pick-up in wages have boosted revenue.
So far Osborne has had little difficulty making large spending cuts, but many economists say further hefty reductions in spending on public services and welfare are likely to become harder, as the easiest cuts have already been made.
(Reporting by Andy Bruce and Ana Nicolaci da Costa)
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