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Government borrowing lower than forecast

Public sector borrowing, excluding the cost of bailing out the banks, was lower than expected over the 2010-11 financial year. In March 2011, the last month of the financial year, net borrowing was £18.6bn, which was down on the £19.8bn borrowed in March 2010.

Government net borrowing is falling, although public sector net debt continues to rise.

This means total public sector net borrowing was £141.1bn for the year, which compares with £156.5bn in 2009-10. The latest total was lower than that forecast in March 2011 by the Office for Budget Responsibility in its Economic and Financial Outlook, where it forecast net borrowing of £145.9bn.

The chancellor, George Osborne, has forecast net borrowing in this coming financial year of £122bn. This April will be the first month that new government spending cuts and additional taxation measures will come into force, and analysts will be watching the borrowing figures closely to see whether the government is managing to rein in borrowing as promised.

Public sector net debt (excluding financial interventions) was £903.4bn in 2010-11, which was equivalent to 59.9% of GDP. This compares with 2009-10 when the figure was £760.3 billion, equivalent to 52.8% of GDP. This figure is expected to reach a peak of 70.9% of GDP in 2013-14. Of course, it has to be remembered, that although net borrowing is coming down, it is still adding to existing net debt. In other words the country owes more this year than it did last, and this will continue to grow over the next three years.

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Posted in government borrowing

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