The UK government’s year-to-date borrowing was lower than expected despite an increase in October, official data showed on Tuesday, boosting finance minister Jeremy Hunt’s spirits on the eve of a key budget update.
Net public sector borrowing reached 98.3 billion pounds ($123.2 billion) in the seven months to October, the Office for National Statistics (ONS) said in a statement.
Although this was lower than the £115.2bn expected by the Office for Budget Responsibility (OBR), the financial watchdog, it was still up £21.9bn on the same period last year.
The ONS also revealed that borrowings reached £14.9bn in October, an increase of £4.4bn on the same month last year due to higher benefits and interest payments.
This was the second highest October borrowing since monthly records began in 1993 and exceeded the OBR’s forecast of £13.7bn.
Treasurer Hunt’s budget update, or autumn statement, is due to be published on Wednesday and could determine the Conservative government’s chances of re-election, or the scale of its defeat.
The party is lagging far behind in opinion polls ahead of a general election expected next year.
“October’s fiscal numbers do not deter the chancellor from embarking on pre-election fiscal policy,” said Ruth Gregory, an analyst at Capital Economics.
“Cumulative borrowing for the first seven months of the financial year remains £16.9bn below the expected OBR at this stage.”
The ONS added on Tuesday that net public sector debt totaled £2.64 trillion at the end of October, equivalent to around 97.8% of the UK’s annual gross domestic product (GDP).
This is an increase of 2.3 points from the same period last year and remains at a level not seen since the early 1960s.
“October’s statistics are a timely reminder that the task of restoring public finances to a sustainable footing is far from complete,” said Samuel Tombs, an analyst at Pantheon Macroeconomics. I warned you.
Britain’s Conservative government, led by Chancellor Rishi Sunak, hopes Wednesday’s fiscal plan will narrow the gap with Keir Starmer’s main opposition Labor party.
Mr Sunak was heartened by news last week that UK inflation had sharply slowed to 4.6% in October from 10.1% in January.
However, the UK is suffering from a cost of living crisis, and this rate remains the highest among the richest countries in the G7 world.
“We have achieved our promise to halve inflation, but we must continue to support the Bank of England to bring inflation down to 2.0%,” Hunt said in response to Tuesday’s figures.
“It means being responsible for the country’s finances.
“In tomorrow’s Autumn Statement, I want to focus on how we can boost business investment and get people back to work to deliver the growth this country needs.”