Finland Times

 

British public deficit in November is smaller than the market expectation consensus, boosted by higher tax receipts and a bank fine of 1.1 billion pounds.

     

But economists here reckon that the outlook of the country's public fiscal situation is still bumpy.

     

BIG DECLINE

     

British public sector net borrowing was 14.1 billion pounds (or 22 billion U.S. dollars) in November 2014, falling by 1.6 billion pounds, or around 10 percent, compared to that of November 2013, said Office for National Statistics (ONS) Friday.

     

Public sector net borrowing excluding public sector banks from April to November 2014 was 75.8 billion pounds, a decrease of 0.5 billion pounds compared to the same period a year earlier, said ONS.

     

At the end of November 2014, Britain's public sector net debt excluding public sector banks was 1,457.2 billion pounds, equivalent to 79.5 percent of gross domestic product (GDP), data showed. It was 89.7 billion pounds higher than that in a year earlier.

     

In November the public purse was boosted by 45.3 billion pounds of tax receipts, a 2.4 billion pounds increase compared with a year earlier. The Treasury has also received a one-off sum of 1.1 billion pounds of bank fines imposed on five big banks for manipulating the currency markets.

     

BUMPY ROAD AHEAD

     

Samuel Tombs, senior UK Economist at Capital Economics, said in a note that the latest UK public borrowing figures showed that the trend in borrowing has finally begun to improve, the pace at which the deficit is falling remains disappointing slow given the strength of the economic recovery.

     

"While November's public financial figures are a step in the right direction, the road to fiscal sustainability looks set to be long and bumpy," he said.

   

Earlier this month, the Office of Budget Responsibility (OBR) raised its fiscal deficit forecast for the fiscal year 2014-15 (began at April 2014) from 86.6 billion pounds to 91.3 billion pounds.

     

Martin Beck, senior economic adviser to the EY ITEM Club, also comments: "After a prolonged period of the deficit stubbornly refusing to fall, November's fiscal numbers may at first seem to provide evidence that the public finances are finally starting to share in the economy's resurgence."

     

"However, the underlying fiscal position is not quite as positive as the headline numbers suggest," he added.  (1 pound = 1.56 U.S. dollars)