Christmas Blow For Osborne As Borrowing Rises

Public finances worsened in November in a setback for the Chancellor as he attempts to bring down the UK's annual deficit.

Chancellor George Osborne received an unwelcome Christmas present as official figures showed public sector finances unexpectedly deteriorated last month.

The Office for National Statistics (ONS) said borrowing - excluding the effect of bank bail-outs - rose to £14.2bn in November, £1.3bn up on the same month last year.

Borrowing for the fiscal year-to-date, at £66.9bn, is still lower than it was at the same stage in 2014/15 but is now fast approaching the target of £73.5bn for the full year to the end of March pencilled in by the independent Office for Budget Responsibility (OBR).

Paul Hollingsworth, UK economist at Capital Economics, said: "There was no festive cheer for the Chancellor in November's UK public finances figures.

"Indeed, it now looks almost impossible for Mr Osborne to meet the OBR's forecast for the fiscal year as a whole.

"The upshot is that, barring a Christmas miracle, the Chancellor looks extremely unlikely to meet his borrowing forecasts this year."

James Knightley of ING Bank said that but for "a dramatic improvement in the trend", the 2015/16 target looked set to be missed "by possibly more than £5bn".

The Chancellor is aiming to turn the UK's budget deficit into a surplus by the end of the decade.

This month's figures had been expected to show an improvement on borrowing on last year's figure of £12.9bn but instead worsened.

Borrowing in November 2014 had been partly flattered by £1.1bn in revenue from banks fined over foreign exchange rate rigging.

The OBR said the latest monthly figures were affected by one-off factors and that it continued to expect borrowing "to fall more sharply over the final four months of the year than over the first eight".

A Treasury spokesman said: "Beyond these factors, we can see that our plan is working, with government receipts growing - stronger income tax, VAT and on-shore corporation tax - showing the benefits of a growing economy with record employment levels."

But Labour's shadow chancellor John McDonnell said Mr Osborne had failed to deliver on his promises made in 2010 to balance the books.