Public borrowing jumps yet again in December

The government borrowed marginally more in December 2012 than it did in the same period the previous year, figures show. Another nail in our coveted triple-A rating..?

by Michael Northcott
Last Updated: 19 Aug 2013
So the latest figures from the Office for National Statistics (ONS) say that public sector net borrowing - excluding one-off financial interventions - rose to £15.4bn in December last year, up 5.4% from £14.8bn in December 2011.

The rise has caused concern amongst some analysts who fear that the UK’s coveted AAA credit rating may suffer as a result. Given that the government’s central rhetoric is about deficit reduction, it will be a source of worry for lenders that the reduction doesn’t seem to be happening.

Still, it’s not as though analysts were expecting borrowing to fall: they actually predicted a rise to £15.2bn, meaning they were only out by around £200m. That doesn’t sound much, but it’s almost £7 per working adult in a single month - a severe margin of error in our book.

It’s also worth noting that public sector borrowing is rising at such an alarming rate that this £600m increase in borrowing is being described by most news outlets this morning as a ‘small rise’.

The December figure also takes the UK’s total borrowing figure so far this financial year to £106.5bn, £7.2bn more than the same portion of the previous financial year. That excludes the money spent on acquiring the Royal Mail pension fund, too. The pound fell 0.2% against the euro when the figures were released on Tuesday morning.

It is worth remembering, however, that the government’s original target was to have the national debt as a percentage of GDP falling by 2015. Tax receipts actually rose 3.6% for December compared with 2011, so there is an outside chance that the tiny bit of economic growth the UK is experiencing at the moment could offset the growth in borrowing.

Still, we’ve still to see the UK’s Q4 growth figures, which could make depressing reading if all the other figures released so far are any indication. We’ll keep you posted.

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