UK public finances worsen more than expected in February

Britain's public sector´s finances worsened unexpectedly in February, adding to the government´s difficulties in meeting its target for the fiscal year.

Public sector net borrowing excluding public sector banks fell by £0.5bn to £7.1bn in February 2016 compared with the same month of the previous year, according to the Office for National Statistics.

However, that was worse than the £5.9bn which economists had been expecting.

That brought the tally for Westminister´s borrowings in the current financial year-to-date to £70.7bn, down by £14bn from the same period of the prior year.

As a proportion of gross domestic product, the government´s stock of debt hit £1,577.1bn, £46.3bn more than a year ago and the equivalent of 83.1% of GDP.

The week before, the OBR projected the deficit would reach £72.2bn during the fiscal year ending in March 2016.

Hence, public sector borrowing would need to increase by just £1.5bn in March in order for the budget target to be met.

"That’s highly unlikely – it would be the lowest borrowing in the month of March since 2001 – although revisions in later vintages of the data could help somewhat. UK borrowing has come in higher than expected as the economy has slowed more than expected.

"Meanwhile, the Chancellor is finding it increasingly difficult to find the heavy spending cuts needed to meet his self-imposed fiscal mandate of a surplus by 2019/20," said Daniel Vernazza, Lead UK economist at UniCredit Research.