U.K. public finances deteriorated in May, making it hard for the Chancellor to meet his fiscal targets amid recession.
Public sector net borrowing that excludes government support for banks increased to GBP 17.9 billion in May from GBP 15.2 billion a year ago, the Office for National Statistics said Tuesday. Borrowing was higher than an expected GBP 14.8 billion.
Income receipts declined 7.3 percent in May from a year ago, while expenditure surged 7.9 percent. Including intervention, PSNB was GBP 15.6 billion compared to GBP 12.3 billion in the previous year.
Only two months into the fiscal year, it is evident that Chancellor George Osborne is facing a major battle to meet his fiscal targets for 2012/13, IHS Global Insight economist Howard Archer said.
For the April to May period, public sector net borrowing totaled only GBP 0.4 billion, which was GBP 24.1 billion lower net borrowing than in the same period of 2011/12.
Net borrowing for the fiscal year ended March was revised up to GBP 127.6 billion from a previously estimated GBP 124.4 billion.
Excluding the temporary effects of financial interventions, net debt at the end of May totaled GBP 1013.4 billion, equivalent to 65 percent of GDP. This compares with a level of 61.3 percent of public debt during the same period of last year.
The central government net cash requirement was GBP 13.3 billion, a GBP 2.5 billion higher net cash requirement than in May 2011.
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