-Oct PSNBX Stg8.604bn Vs Stg5.937bn In Sep 2011
-Oct Year-To-Date PSNBX Ex-Royal Mail Up Stg5Bn On Year Ago

LONDON (MNI) – UK public borrowing in October was up from year ago
levels, with a slowdown in receipts growth meaning we could see little
or no improvement in borrowing this year.

While Chancellor of the Exchequer George Osborne has been helped by
a temporary boost of Royal Mail pensions and by transferring the coupon
payments resulting from Quantitative Easing from the BOE, the underlying
picture remains poor. With GDP growth likely to remain weak for some
time, it is difficult to see how receipts will pick up enough to make a
sizeable impact in the deficit.

Public sector net borrowing excluding financial interventions,
PSNBX, came in at Stg8.604 billion in October, up from Stg5.937 billion
in the same month a year earlier. Analysts had expected to see a lower
outturn of Stg6.2 billion

For the year to data PSNBX stood at Stg45.3 billion, down from
Stg68.3 billion, although this has been flattered by the one-off
transfer or pensions from Royal Mail.

Ex-Royal Mail PSNBX was Stg73.3 billion in April to October,
compared with Stg68.3 billion in the same period a year earlier, a rise
of 7.3%.

While spending growth is running a little below the Office for
Budget Responsibility’s forecast, receipts growth is far weaker.
Spending was up 2.3% for the year to date compared with the OBR forecast
of 3%. Receipts growth, however, was up just 0.4% against the forecast
of 3.7%.

Earlier this month the Treasury announced that it would be
transferring the cash balances from the Asset Purchase Facility to HMT
along with any further coupon payments. National Statistics have yet to
rule on what impact this will have on the public finances but it looks
set to decrease debt financing by around Stg11 billion this year and
Stg36bn next year.

The transfer of the stock from the APF is likely to cut net debt
this year, while the ongoing coupon payment transfer is expected to
reduce the deficit in the future.

National Statistics confirmed this morning that they would rule on
the treatment of the coupon transfers by January.

–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

[TOPICS: M$B$$$,MABDS$]