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Britain hits annual borrowing target: official data

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(Globalpost/GlobalPost)

Britain met a recently revised annual borrowing target after government departments slashed expenditure in the final month of the fiscal year, official data showed Tuesday.

The news was seen as a boost for finance minister George Osborne, four days after Fitch became the second ratings agency to strip Britain of a top triple-A credit rating, blaming the weaker economic and fiscal outlook.

Public sector net borrowing -- the government's preferred measure of the budget deficit -- stood at £120.6 billion ($184 billion, 141 billion euros) in the 12 months to the end of March marking the end of the government's fiscal year, the Office for National Statistics (ONS) said in a statement.

That just beat the revised official target of £120.9 billion set last month by the government's independent fiscal watchdog, the Office for Budget Responsibility. It was also lower than £121 billion in 2011/2012.

The previous forecast had been put at £119.9 billion.

The data strips out boosts from the transfer of Royal Mail pension assets to the public purse, and cash transfers from the Bank of England's emergency stimulus programme, known as quantitative easing.

The ONS on Tuesday added that state borrowing stood at £15.1 billion in March. That was lower than the £16.7 billion borrowed in the same month of last year.

Market expectations had been for higher March borrowing of £16 billion, according to analysts polled by Dow Jones Newswires.

The data also revealed that government expenditure slid 4.7 percent to £53.2 billion in March, compared with a year earlier.

"Today's data shows borrowing slightly down on last year and below market expectations," a Treasury spokeswoman said in response to the figures.

"Though it is taking time, the government is fixing this country's economic problems.

"The deficit is down by a third (since the coalition came to power in 2010), a million and a quarter new private sector jobs have been created and interest rates are at near-record lows, benefiting households and businesses."

The data also revealed that Britain's total public sector net debt hit a record £1.186 trillion in March, which was equivalent to 75.4 percent of gross domestic product (GDP).

Economists welcomed the upbeat data but cautioned over the pace of deficit reduction.

"Some modestly good news for the Chancellor (of the Exchequer Osborne) as the public deficit for 2012/13 came in marginally below the 2011/12 outturn and slightly less than the OBR had estimated," said Howard Archer, economist at the IHS Global Insight research group.

"The rate of improvement in 2012/13 makes a snail look fast, but at least the chancellor can say the finances moved in the right direction," he added.

Last Friday, Fitch stripped recession-threatened Britain of its triple-A assessment, moving it down one notch to 'AA+' as a weaker economic outlook continues to push up the country's debt.

The downgrade comes almost two months after rival agency Moody's also stripped Britain of a triple-A debt rating, saying government debt was still mounting and that growth was too weak to reverse the trend before 2016.

On Thursday, official will show whether Britain fell into recession during the first quarter of this year.

British GDP shrank 0.3 percent in the fourth quarter of 2012 compared with the previous three months.

Another contraction in the first quarter of 2013 would place Britain in its third recession in under four years, as it buckles under ongoing state austerity and the debt crisis in key trading partner the eurozone.

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http://www.globalpost.com/dispatch/news/afp/130423/britain-hits-annual-borrowing-target-official-data-0