UK posts highest Nov budget deficit

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London, Dec 20 : Britain’s budget deficit hit a record high for November as government spending from the month before spilled over into the latest figures, official data showed on Tuesday. The Office for National Statistics said public sector net borrowing (PSNB) stood at 9.284 billion pounds last month compared with 8.5 billion a year earlier. Analysts had forecast an 8.0-billion-pound outturn. That still left the total for the financial year so far at 31.4 billion pounds, some 3 billion pounds less than a year ago.

“On its current path, borrowing will total about 36 billion pounds in 2005-06 overall, which would be slightly below Gordon Brown’s pre-budget report forecast of 37 billion,” said Jonathan Loynes, chief UK economist at Capital Economics. “However, it would be no surprise if borrowing were to pick up a bit later in the year as tax receipts slow in response to the downturn in the economy.”

Economists said January’s figures will be key to the outlook. The Treasury is banking on a surge in tax receipts thanks to record profits enjoyed by North Sea oil companies and the prospect of record bonuses in the financial sector.

“We are meeting our fiscal rules and will continue to do so,” a Treasury spokesman said after the data were released. The ONS said the main reason for November’s deterioration in public finances was a 6.5% rise in government spending. But statisticians said some of this was probably the result of more spending falling into November as fewer working days in October had pushed down expenditure that month. Taking the two months together, spending was up 3% on the year.

The International Monetary Fund’s annual health check of the British economy, published on Monday, said Brown’s pre-budget report contained welcome plans for an appropriate fiscal adjustment. “This reflects revenues associated with higher energy prices and strong personal income and corporate tax revenues, especially from the booming financial sector,” the report said. It also noted that the government aims to constrain speeding growth from 2008/09, which would put public finances on a more sustainable footing in the longer term, easing the need for tax rises.