British public debt soars

Public sector debt in the United Kingdom climbed above 60 per cent of GDP in February as government agencies borrowed another 12.4 billion pounds ($NZ26.4 billion), the Office for National Statistics said.

The borrowing figure, however, was lower than expected, due to a boost in tax collections.

Furthermore, the January deficit was revised sharply lower- to 43 million pounds from the 4.3 billion pounds which shocked markets when it was announced last month - because of higher estimates for tax revenues and, to a lesser extent, revisions to net investment.

The February borrowing raised total net debt to 857.7 billion pounds, equal to 60.3 percent of gross domestic product, up from 59.9 percent in January and from 50.5 percent a year earlier.

For the financial year to date (April-February), the public sector current budget deficit is 94.7 billion pounds compared with 37.4 billion pounds a year earlier. Net borrowing for the fiscal year to date is 131.9 billion pounds, up from 66.5 billion pounds a year earlier.

The statistics agency said tax receipts in February were 42.6 billion pounds, up from 41.1 billion pounds a year earlier, boosted by the hike in value-added taxes from 15 per cent to 17.5 per cent on January 1.

Jonathan Loynes, economist at Capital Economics, said the February figures were a boost for Treasury Chief Alistair Darling as he prepares to announce a pre-election budget next week.

"The figures leave a total deficit for the first 11 months of the year of 132 billion, suggesting that Mr. Darling may now hit or even undershoot his full-year forecast - on this measure - of 170 billion pounds.

"As such, he now looks likely to have a little wriggle room in the budget to either cut borrowing or fund a few pre-election sweeteners. We suspect that he will choose the latter. Make no mistake, though, a prolonged and painful fiscal squeeze still lies ahead," Loynes said.

- AP