Borrowing threatens Britain's AAA credit rating
Britain's coveted AAA rating came under further pressure today after official figures showed another leap in public-sector borrowing.
The figure, excluding financial interventions such as bank bailouts, was £15.4bn (€18.3bn) in December, compared with £14.8bn (€17.6bn) in the same month the previous year.
It is slightly worse than the £15.2bn (€18.1bn) pencilled in by economists.
It comes after an unexpected increase in November, when borrowing rose to £17.5bn (€20.8bn), up £1.2bn (€1.4bn) from last year, after tax receipts were dented by lower energy company profits.
Within the December figures, the picture was much the same as previous months, with British government spending outstripping tax receipts.
Total expenditure was up 5.4%, with tax receipts up just 3.6% in the month.
Public sector borrowing for the year to date is £106.5bn (€126.9bn), excluding a one-off £28bn (€33.3bn) boost from the transfer of the Royal Mail pension fund into Treasury ownership, which is 7.3% higher than the same period last year.
Martin Beck, UK economist at consultancy Capital Economics, said December's public finance figures confirmed that the Government's fiscal consolidation plans were still off track.
He expects borrowing for 2012/13 to come in at around £113bn (€134.6bn), £5bn (€5.95bn) above the tax and spending watchdog's forecast of £108bn (€128.6bn).
More bad news on the UK economy is expected this week with the Office for National Statistics due to reveal that output contracted in the final quarter of 2012.
All three of the major credit ratings agencies now have the UK's AAA rating on negative outlook.
ING economist James Knightley said: "The question is how long the UK can hold on to its AAA status.
"With the US and France having been downgraded by one ratings agency in the past couple of years, another disappointing UK borrowing number and a widely expected contraction in GDP on Friday will intensify the threat of the UK suffering the same fate."
But a British Treasury spokesman said the figures underlined that the recovery in the government's finances was taking time but the economy was healing.
- Sign up here to receive news by email. Once per day, no spam.