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| UK borrowing less than expected | UK borrowing less than expected |
| (41 minutes later) | |
| The UK government borrowed £12.4bn in February, less than economists had expected, official figures have shown. | The UK government borrowed £12.4bn in February, less than economists had expected, official figures have shown. |
| January's borrowing figure was also revised down sharply, to £43m from £4.3bn. | |
| The UK's total borrowing for the financial year is now more than £130bn. The government's borrowing forecast for the year to the end of March is £178bn. | |
| The government has been suffering from reduced tax receipts because of slow economic growth. | |
| It therefore has to borrow more to compensate. | |
| 'Timely boost' | |
| However, the figure for February was not as bad as some had feared, partly because of the rise in VAT at the beginning of this year and new taxes on bankers' bonuses. | |
| Analysts said that the sharp downward revision in January's borrowing figure and the better-than-expected February figure meant borrowing for the current financial year could be less than the government's forecast. | |
| "February's public finances figures have provided [Chancellor] Alistair Darling with a very timely boost ahead of next Wednesday's Budget," said Jonathan Loynes at Capital Economics. | |
| "The figures leave a total deficit for the first 11 months of the year of £132bn, suggesting that Mr Darling may now hit or even undershoot his full-year forecast." | |
| Deficit cuts | |
| Although the UK's overall level of debt is similar to other major economies, it has increased its borrowing during the downturn at a much faster rate than its competitors. | Although the UK's overall level of debt is similar to other major economies, it has increased its borrowing during the downturn at a much faster rate than its competitors. |
| Chancellor Alistair Darling has pledged to halve the budget deficit in percentage terms over the next four years, but argues that making cuts now could harm the UK's recovery from recession. | Chancellor Alistair Darling has pledged to halve the budget deficit in percentage terms over the next four years, but argues that making cuts now could harm the UK's recovery from recession. |
| On Wednesday, the European Union published a report saying that the government's plans to cut the deficit are not ambitious enough. | |
| EU rules say government deficits must be below 3% of GDP, but the UK's deficit is expected to hit 12.6% of GDP this year. | |
| The Conservatives also argue that cuts need to be made more quickly. | |
| Burgeoning debt levels have also led to concerns in recent months that the UK could lose its AAA credit rating - reserved for the very safest borrowers. | |
| However, earlier this week, Moody's agency said the UK's top rating was secure. |