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UK public borrowing higher than forecast in February

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by Kay Mitchell

The Office for National Statistics (ONS) has today revealed UK public sector borrowing was higher than expected last month.

According to the ONS, public sector borrowing was £11.8 billion in February – the highest for the month of February since records began in 1993.

Furthermore, the figure was far higher than the £6.9 billion expected by economists.

For the financial year to date, borrowing stands at £123.5 billion – meaning the Government is on target to meet its £148.5 billion borrowing – forecast by the Office of Budget Responsibility (OBR).

Overall, public sector net debt stands at £875.8 billion – the equivalent to 58% of UK GDP (total economic output).

Commenting, ING Bank economist James Knightley said: “The public finance numbers for February were significantly worse than expected.”

A report published yesterday by the Ernst & Young Item Club suggested the Government could be in line for an £8 billion windfall this year due to a rebound in tax revenues and a cut in public spending.

The Item Club is estimating public borrowing for the financial year to the end of March to be £140.2 billion – £8.3 billion lower than the OBR‘s forecast of £148.5 billion.

In other news today, the ONS announced UK Consumer Price Inflation (CPI) rose to an annual rate of 4.4% in February – the highest rate since October 2008.

The latest figures mean inflation is still way above the target of 2% – where it has been for more than a year and exceeded economists expectations of a rise to 4.2%.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, surged to 5.5% in February, from 5.1% in January – this represents the highest level since July 1991.

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News posted: March 22, 2011

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