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Government borrowing continues to fall

Government borrowing in December fell by £2.2bn from £15.9bn in December 2010 to £13.7bn. This means that borrowing has now fallen for four consecutive months.

The figures for the last financial year together with the current financial year are shown below. These are shown using the so-called “ex-measures” which exclude the temporary effects of financial interventions.

Cumulative public sector net borrowing (ex measure)

Source: ONS

It would appear that the Chancellor is on course to reach his target for government borrowing this year of £127bn, with the current total so far having reached £103.3bn.

The current improvement was due to higher government tax receipts and was helped by the levy on financial institutions plus the increase in VAT to 20% in January 2011. There was also a fall in central government spending of 0.09%.

The diagram below shows the current net debt situation.

Net debt as a percentage of GDP excluding financial interventions

Source: ONS

The diagram shows that current net debt has risen from 59.4% UK gross domestic product in December 2010, to 64.2% in December 2011. Although the government is reducing its borrowing, it is still adding to the total amount of debt outstanding every month. Current net debt now stands at £1.004 trillion.

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Posted in government borrowing, government spending

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