The UK government borrowed more than expected in March, official figures have shown, but still met its borrowing target for the year.
According to the Office for National Statistics, public sector net borrowing, excluding interventions in the financial sector, was 18.2 billion pounds in March, the highest since November 2010. Most analysts had expected March borrowing to be at the level of about 16 billion pounds.
However, previous months’ borrowing was revised down, meaning the government met its target of 126 billion pounds for the year. The annual borrowing figure marked a reduction of almost 11 billion pounds from the previous year, as it dropped to 8.30 percent of GDP in 2011/12 from 9.27 percent in 2010/11 – in line with forecasts from the independent Office for Budget Responsibility.
Tax increases, such as the rise in VAT from 17.5 percent to 20 percent, and government spending cuts were the main reasons behind the reduction over the year.
Net debt, excluding the effect of government interventions, topped 1 trillion pounds, the equivalent of 66 percent of the countryâ€™s GDP.
The UK government is aiming to eliminate the budget deficit by 2016-17. However, an uncertain growth outlook, as the debt crisis threatens the euro zone – the UK’s biggest trading partner, could yet disrupt the government’s attempts to reach its budget deficit target.
The UKâ€™s economy shrank by 0.3 percent in the last quarter of 2011. Tomorrow’s figures will show how the economy performed in the first quarter. They will show whether or not the UK’s economy is in recession, defined as two consecutive quarters of contraction.