UK public borrowing hits five-year high in October
By Michele Maatouk
Date: Thursday 21 Nov 2019
(Sharecast News) - Public sector net borrowing hit its highest level in five years in October, according to figures released by the Office for National Statistics on Thursday.
Excluding public sector banks, borrowing rose to £11.2bn from £8.9bn last October, versus consensus expectations of £9.3bn.
Over the year so far, borrowing was up 10.3% compared to the same period a year ago to £46.3bn.
Andrew Wishart, UK economist at Capital Economics, said: "The worst October for the public finances for five years won't prevent whoever wins the election embarking on a fiscal splurge. Borrowing appears to have been higher than expected due to Brexit preparations, and leaves the budget deficit on track to rise for the first time in a decade this year. The investment plans laid out by the major parties suggest it will rise substantially further in 2020/21."
He noted that department spending on staff and goods and services rose by £2.4bn compared to a year earlier. "We suspect that reflects Whitehall preparing for a possible no deal Brexit at the end of the month," he said.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the blow from October's rise in public borrowing has been cushioned by a £4.0bn downward revision to the cumulative total in the first six months of the fiscal year.
"As a result, full-year borrowing will total £45.6bn in 2019/20, or about 2.1% of GDP, if the year-over-year trend in the first seven months of this fiscal year is maintained. It's a little worrying that the trend appears to be deteriorating- meagre year-over-year growth in central government tax receipts of just 0.4% in October was broad-based- but the scale of today's revisions suggests the most recent data should be taken with a pinch of salt.
"Meanwhile, year-over-year growth in departmental spending likely will slow from October's 6.3% year-over-year rate soon; it is rare for departments to outspend their budgets. Accordingly, we think borrowing is on track to equal about 2.0% of GDP this year."
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