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Government borrowing worse than expected in October

November 25, 2018

 

The government borrowed far more than analysts expected in October, the first figures to be published since Philip Hammond's Budget last month show. 

 

Government borrowing hit a three-year high in October after a steep rise in spending and a slowdown in tax receipt growth, according to official figures. 

 

The Office for National Statistics (ONS) said public sector net borrowing, excluding state-owned banks, rose by £1.6 billion last month to £8.8 billion. 

 

This was the highest October borrowing since 2015 and was far more than the £6.2 billion economists had expected. 

 

The ONS said there had been "notable" growth in expenditure on goods and services, as well as social benefits. 

 

Interest payments on government debt also increased. 

 

"The increase in borrowing compared to last year was due to a £2.2bn rise in "other" (most likely departmental) spending," said Andrew Wishart, UK economist at Capital Economics. 

Mr Wishart said the October figures could be a "worrying sign for the Chancellor" if the trend continued. 

 

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said it was to soon to conclude that the Chancellor would miss the official forecast for borrowing this year. 

 

He points out that the data is often revised and "the Chancellor won't need to respond to a modest overshoot". 

 

The nature of the UK's exit from the European Union, is likely to have an impact on the nation's finances. 

 

In October, the Chancellor said that a good Brexit agreement would enable the Treasury to spend a "double deal dividend". 

 

However, a no deal scenario could upset government spending plans, economists say. 

 

"If there is a no deal Brexit, the resulting economic slowdown would probably cause the public finances to deteriorate further," Mr Wishart said. 

 

 

Resources: 

https://www.bbc.co.uk/news/business-46287887 

https://www.newsandstar.co.uk/news/national/17237837.government-borrowing-highest-for-three-years-in-october/ 

 

 

 

 

 

 

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