LONDON (Reuters) - Britain’s tax revenue will need to grow much faster in February and March or public spending will have to fall for the government to meet its 2012/13 borrowing target, the country’s budget watchdog said on Thursday.
The Office for Budget Responsibility said that to meet its December forecast for public sector net borrowing, borrowing in the final two months of 2012-13 would have to be 6.4 billion pounds ($9.8 billion) lower than over the same period last year.
“To meet our autumn forecast would now require much stronger growth in tax receipts in the last two months of the year than we have seen since December or much lower-than-forecast expenditure by central or local government,” it said.
The OBR said that this projection was based on a 2012-13 borrowing target of 119.9 billion pounds, which strips out the benefit of any boost from Royal Mail pension assets or transfers of interest income from the Bank of England.
Earlier on Thursday the Office for National Statistics had ruled that the finance ministry could set aside less income from the Bank of England against another borrowing measure than the OBR had assumed it would be able to.
($1 = 0.6535 British pounds)
Reporting by Olesya Dmitracova and David Milliken