November public borrowing lower than expected, outlook tough
LONDON (Reuters) - Britain's budget deficit narrowed more than expected in November compared to a year earlier, official data showed on Wednesday, although weak growth and worries about the euro zone still threaten the government's attempts to balance the books.
The figures are a bright spot for the government after ratings agency Moody's warned on Tuesday that Britain had little fiscal leeway in the face of future shocks that could threaten its triple-A credit rating.
Public sector net borrowing excluding public sector interventions -- the government's preferred measure -- fell last month to 18.093 billion pounds from 20.360 billion pounds in November 2010. This was below economists' average forecast in a Reuters poll of 19.6 billion pounds.
The government is seeking to largely eliminate the country's budget deficit, which peaked at more than 10 percent of GDP before the coalition came to power in 2010.
However, attempts to improve the public finances face huge pressure from stagnant growth and uncertainty about the knock-on effects of the euro zone sovereign debt crisis. Some forecasters think the economy could tip back into recession early next year.
A downturn would undermine the government's deficit reduction plans, eroding tax receipts and raising the bill for state benefits.
The Office for National Statistics said the broader public sector net borrowing measure -- which includes the cost of bailing out Britain's banks and some revenues from the sector -- fell to 15.231 billion pounds in November from 18.4 billion pounds in November 2010.
Worries about the economic outlook, high inflation and weak wage growth have eroded consumer and business confidence.
The Bank of England is pumping 275 billion pounds into the stagnant economy to try to boost growth and prevent inflation from falling below its 2 percent target.
Most economists think it is all but certain that the central bank will extend its asset purchase programme once the current round ends in February.
The Bank was due to publish the minutes from its December policy meeting at 9:30 a.m. Analysts expected that all nine policymakers voted to keep interest rates at a record low of 0.5 percent and to hold off from expanding the quantitative easing programme.
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