UK government deficit rises more than expected and public sector borrowing continues to grow
The UK government’s debt and budget deficit both rose in November, as borrowing came in higher than expected.
The deficit rose to £12.6bn, with borrowing to fund everyday government spending accounting for £9.9bn, according to data from the Office for National Statistics.
The government now owes the private sector almost £1.66 trillion, an increase of £58.6bn since last year and the highest level on record.
Read more: These five charts put public sector borrowing in perspective
This means public sector net debt is now an equivalent of 84.5 per cent of the UK’s GDP.
In March the Office for Budget Responsibility had predicted debt to peak at 83.7 per cent of GDP in the last financial year, but it is now predicted to peak above 90 per cent next year.
In this financial year from April the government has borrowed £59.5bn – £7.7bn lower than the equivalent period last year.
Despite the rise in borrowing, the government is on track to meet its latest set of fiscal rules, announced by chancellor Philip Hammond during this year’s Autumn Statement.
Read more: Public borrowing could overrun by £100bn over the next five years
Howard Archer, chief UK and Europe economist for IHS Markit, described the data as “reassuring news” for the chancellor.
He said: “This is welcome for Mr Hammond as it would have been somewhat embarrassing if the first set of public finance figures after the November Statement had immediately put question marks over his new fiscal targets.”
The deficit as a percentage of GDP has remained since the financial crisis
The pound fell as the news emerged to lows of $1.2324 against the dollar in morning trading. However, it recovered to trade almost flat at midday.
Joshua Mahony, market analyst at IG, said: “The pound is coming under significant pressure this morning, as the Brexit fears, coupled with a new 2016 high for UK public borrowing brings heightened fears of another big move lower for sterling.”