By Lucy Phillips
18 March 2010
Public borrowing rose less than expected in February, according to official figures out today, giving the government a boost ahead of next week’s Budget.
The UK government borrowed £12.4bn last month, below economists’ forecast of £14.8bn, the data from the Office for National Statistics reveals. But it is still the biggest February deficit on record, and well above the £8.8bn borrowed in the same month in 2009.
A rise in VAT at the beginning of the year and new taxes on bankers’ bonuses contributed to last month’s better than expected borrowing figures.
Total borrowing for the first 11 months of the financial year was just under £132bn, fuelling speculation that the deficit at the end of the year will be lower than the government’s forecast. The Pre-Budget Report predicted a figure of £178bn deficit, but this could now be around £166bn.
The figures are expected to give the government more room to manoeuvre in its March 24 Budget, making pre-election ‘sweeteners’ from Labour more likely.
Rowena Crawford, a research economist at the Institute for Fiscal Studies, said: ‘As Chancellor Alistair Darling prepares for next week’s Budget he will doubtless be pleased by today’s figures.’
But she added the warning: ‘Despite these figures, the overall state of the public finances – and the fact that lower borrowing this year might not translate into lower borrowing going forward – means the chancellor should not announce a significant permanent net giveaway in next week’s Budget.’
