UK public sector borrowing fell in December to £4bn ($5.2bn, €4.7bn), confounding expectations that it would rise to £4.6bn, but increased over the fiscal year to date, as the government shored up its finances ahead of Brexit.
The £4bn figure for public sector net borrowing in the last month of 2019 was down from £4.3bn in the same month last year, according to official figures from the Office for National Statistics. Excluding public sector-owned banks, the deficit was £4.8bn, £0.2bn less than in December 2018.
However in the first nine months of the fiscal year, borrowing rose by £4bn year-on-year to £54.6bn because of a 3.4 per cent drop in corporate tax receipts while other current spending rose by a record 5 per cent. Tradingeconomics.com attributed this to a pay rise for health workers.
The government is due to announce its spring budget in March, the first after the UK leaves the European Union on January 31. In September, Chancellor of the Exchequer Sajid Javid promised an additional £14bn in public spending, the largest increase in 15 years.
The government has committed to increasing spending by 4.1 per cent from 2019-2020 to 2020-21, following a decade of austerity.
Sterling and other UK markets barely budged on the news. “The March 11 Budget will be rather more material in terms of the outlook for the UK economy and asset prices,” ADM Investor Services chief economist Marc Ostwald said.
UK public debt at the end of December, excluding the Bank of England, was £1.644tr, equivalent to 73 per cent of GDP, up by £48bn on a year ago.