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UK borrowing less than expected UK borrowing less than expected
(about 1 hour later)
UK government borrowing could be less than forecast this financial year after better-than-expected figures for February and revised January data.
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.
The borrowing figure for January was also revised sharply downwards, to £43m from £4.3bn. The figure for January was also revised sharply downwards, to £43m from £4.3bn.
Revisions for this financial year have now reduced borrowing by £2.9bn, meaning full-year borrowing could beat the government's £178bn forecast.Revisions for this financial year have now reduced borrowing by £2.9bn, meaning full-year borrowing could beat the government's £178bn forecast.
Until this year, most analysts thought the government's borrowing forecast was too optimistic. Until recently, most analysts thought the government's borrowing forecast was too optimistic.
Despite the revisions and February's better-than-expected figure, government borrowing is still running at record highs for the year, partly due to reduced tax receipts because of slow economic growth.Despite the revisions and February's better-than-expected figure, government borrowing is still running at record highs for the year, partly due to reduced tax receipts because of slow economic growth.
'Timely boost''Timely boost'
The borrowing 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.The borrowing 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.
"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."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.""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."
Howard Archer at IHS Global Insight agreed: "Mr Darling could significantly undershoot the £178bn public sector borrowing requirement that he forecast for 2009/2010 in last December's pre-Budget report."Howard Archer at IHS Global Insight agreed: "Mr Darling could significantly undershoot the £178bn public sector borrowing requirement that he forecast for 2009/2010 in last December's pre-Budget report."
Deficit cutsDeficit 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.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.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.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.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.However, earlier this week, Moody's agency said the UK's top rating was secure.