No early Christmas gift for George Osborne; UK borrowing soars

The UK borrowed far more than expected in November, according to official figures.

Public sector net borrowing totalled £14.2 billion, up from £7.4 billion in October and way ahead of market expectations, which had been for a turnout of £11.8 billion in what’s often a weak month for government receipts.

Economists have long been worried that the UK will miss its borrowing targets, but in his Autumn Statement Chancellor of the Exchequer George Osborne insisted that he was on track to move the country into a primary budget surplus by 2019/20.

However, while this month’s data look bad for Number Eleven Downing Street, the National Statistics office itself suggests looking at the cumulative year-to-date figures instead, emphasising the volatility of the monthly series.

Here the news is slightly better, with the central government’s cash requirement down £8.2 billion from January to November 2014, at £49.4 billion.

Still, the pound is likely to face headwinds as the New Year gets under way. Borrowing remains high and the Bank of England appears in no hurry to follow the Federal Reserve in raising interest rates. Moreover, the battle lines are now being drawn over the UK’s place or lack of one in the EU, which will keep the ‘Brexit’ issue smouldering ahead of a referendum on the issue, which must come relatively soon.

Sterling is the other currency “I remain wary of”, writes Kit Juckes, Societe Generale’s long-serving macro strategist, who worries too about the Australian and New Zealand dollars.

“We’ll have to live with a weaker pound in 2016,” he adds.

This post first appeared on news.markets: http://news.markets/bonds/no-early-christmas-gift-george-osborne-uk-borrowing-soars-7235/