UK Government borrowing £5bn down in the last financial year

News Article - 11 May 2011
Category: Business

Official figures have shown the UK Government has borrowed £5 billion less than expected in the last financial year.

Borrowing for the last financial year up to 1^st April 2011 totalled £141.1 billion, significantly less than the previously forecast £145.9 billion by the Office of Budget Responsibility (OBR).

This figure had already been lowered by Chancellor George Osborne from £148.5 billion during the March Budget, suggesting measures to reduce the deficit are already beginning to take effect.

Increased VAT and cuts to Government spending for the coming 12 months is expected to see borrowing fall even further to £122 billion.

However, many financial experts await the outcome of the fresh cuts which are expected to kick in from this month with a view to measuring how quickly the impact feeds through to borrowing levels.

Borrowing alone in the public sector, excluding government bail-outs to banks, totalled £18.6 billion and Chancellor George Osborne has forecast a peak of public sector debt at 70.9 per cent of the UK's gross domestic product (GDP) by 2014.

Public sector borrowing in February alone reached £11.8 billion, nearly double the amount forecast by the nation's economists. As a result the private sector remains a crucial element of the nation's economic recovery.

The Coalition Government are encouraging small businesses to speculate to accumulate but many SMEs still find that red tape suffocates them in their bid to improve the efficiency of the financials processes.

The Ernst & Young Item Club recently called upon sizeable UK firms to spend more of their cash reserve to ensure a 'durable' economic recovery. The declining overall borrowing figures for the UK could be attributed to the private sector investing their own money to accelerate a major revival in business and consumer spending.

Article keywords: Public sector borrowing, Office of Budget Responsibility, OBR, Chancellor, George Osborne, Budget, VAT rate rise, Coalition Government, Ernst & Young Item Club,

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