LONDON: Britain borrowed much more than expected in October, thwarting finance minister George Osborne in his efforts to reduce the deficit and shunt the economy away from stagnation.
The figures published yesterday show weaker businesses — mostly in the oil and gas sector — paying less tax than expected and may undermine government efforts to shore up public support for its policies of spending cuts and tax rises.
The numbers are the last figures to be released before Osborne presents his twice-yearly fiscal update on December 5. After a positive surprise in September, they revert to the borrowing overshoots seen for most of the tax year.
Separately, minutes of the latest Bank of England meeting showed little appetite for more stimulus, cutting off for now that alternative avenue of support, at a time when BoE Governor Mervyn King anticipates weak growth and rising inflation.
The Office for National Statistics said the government’s preferred measure, public sector net borrowing excluding financial sector intervention, came in at £8.6bn ($13.7bn) in October, up from £5.9bn in October 2011.
This was well above economists’ average forecast of £6bn, and higher even than the most pessimistic estimate in a Reuters poll of 19 analysts.
A large part of the increased deficit is due to a 10 percent drop in corporation tax receipts, driven by lower profits from energy companies after a 20 percent annual fall in oil and gas extraction in the 12 months to September due to extra maintenance and long-term decline in North Sea reserves.
Reuters
