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UK public borrowing overshoots forecasts in August

BOE holds rates but two policymakers vote for early stimulus end
BOE holds rates but two policymakers vote for early stimulus end   -   Copyright  Thomson Reuters 2021   -  
By Reuters

<div> <p>By David Milliken and Andy Bruce</p> <p><span class="caps">LONDON</span> – British public borrowing fell less sharply than expected in August and was its second-highest on record for the month, government figures showed on Tuesday, highlighting the hefty ongoing costs of the <span class="caps">COVID</span>-19 pandemic.</p> <p>Public sector net borrowing, excluding state-controlled banks, totalled 20.5 billion pounds ($28.0 billion) in August, down 5.5 billion pounds from August a year earlier the Office for National Statistics said on Tuesday.</p> <p>Economists polled by Reuters had on average forecast borrowing of 15.6 billion pounds for August.</p> <p>British government borrowing soared last year due to heavy spending during the <span class="caps">COVID</span>-19 pandemic and hit its highest since World War Two as a share of the economy at 15.5% of gross domestic product, up from an earlier estimate of 14.2%.</p> <p>Public debt as a share of gross domestic product totalled 2.023 trillion pounds or 97.6% of <span class="caps">GDP</span> in August, the highest ratio since March 1963.</p> <p>Borrowing has fallen substantially during the current financial year but is still on track to be high by historic standards.</p> <p>Finance minister Rishi Sunak will unveil new budget and growth forecasts on Oct. 27, as well as new multi-year spending limits for individual government departments and potentially some longer-term fiscal goals.</p> <p>Last week the Financial Times reported that Sunak would set out a target of ending borrowing for day-to-day spending within three years, and also aim to ensure that a measure of underlying public debt started falling by the 2024/25 tax year.</p> <p>Britain’s finance ministry said no decisions had been taken, beyond Sunak’s pre-existing goal of putting the public finances on a more sustainable footing.</p> <p>($1 = 0.7317 pounds)</p> <p/> </div>