Government borrowing worse than expected in November

Borrowing for the month of November 2015 was £14 billion, a £1.3 billion increase compared to the same time last year. 

The increase in debt has cast doubts over whether the Chancellor will meet forecasts for this financial year. However, The Office for National Statistics (ONS) claimed that the figure for November 2014 was helped by a one-off boost of £1.1 billion in fines for foreign exchange rigging. 

Total borrowing for the financial year to data has been calculated at £66.9 billion, down £6.6 billion compared to the same time last year. 

The independent Office of Budget Responsibility (OBR) estimates that borrowing for the whole of the financial year 2015-16 is expected to be £68.9 billion. The estimation excludes the support for public sector banks and new changes to the treatment of housing associations. 

The £68.9 billion number is well below last year’s £90.1 billion, which suggests Chancellor George Osborne will achieve his aim of cutting government borrowing. Osborne plans to eliminate the annual gap between government spending and revenue by the end of 2020. 

The ONS also declared that total public sector debt had risen to £1,536.4 billion, equivalent to 80.5 per cent of the UK’s annual economic output. 

Nevertheless, both October and November's monthly borrowing figures have been higher than expected, leading some economists to doubt that the Chancellor will be able to meet the OBR's forecast for the current financial year.

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 Osborne to meet the OBR's forecast for the fiscal year as a whole.

"If we assume that the trend seen so far this year continues, then borrowing for 2015-16 as a whole would come in at around £81bn."

Robert Chote, chairman of the OBR, said he was ‘not particularly’ surprised by the latest borrowing figures.

He added: ”There are a number of particular reasons why the borrowing numbers should look relatively bad this November relative to the previous one.

"On the spending side, it's got something to do with the timing of which particular months the government's contributions to the European Union fall, and also the government's contributions to the bit of the World Bank that lends to the poorest countries."

However, a Treasury spokesperson said that borrowing was higher due to a number of one-off factors that were likely to unwind next month. 

They 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.”

However, Howard Archer, chief economist at IHS Global Insight, said: "The Chancellor now faces a massive task to meet his fiscal targets for 2015-16 and it is frankly hard to see how he can make it - even allowing for the fact that public finances can be volatile from month to month."

David Kern, the chief economist at the British Chambers of Commerce, said: "The public finances are likely to be better this year than in the previous financial year, but... the underlying message remains that our budget deficit is still too high and greater efforts are needed, through reducing current public spending and generating sufficient tax receipts."