UK public finances improve substantially in December

Excluding public sector banks, public sector net borrowing - defined as the budget deficit plus net investment - fell by £11.0bn or 12.9% in the financial year to date, bringing the total to £74.2bn, the ONS noted on Friday.

Concurrently, the central government's net cash requirement fell by £17.2bn to £63.1bn. Commenting on the figures, Dr Howard Archer, chief European+UK economist at IHS Global Insight, "December’s much improved public finances give the Chancellor a fighting chance of meeting his 2015/16 targets, although he will still need a pretty stellar performance through January-March. In particular, the Chancellor is going to need very strong tax receipts in the key month of January.

"It will still be far from easy for George Osborne to meet his 2015/16 targets."

Central government expenditures fell by 1.8% year-on-year while receipts rose by 3.6%. In comparison with a year ago, PSNB fell by £4.3bn in December to £7.5bn, the lowest December reading since 2006.

Public sector net debt at the end of December stood at £1,542.6bn or 81.0% of gross domestic product after increasing by £53.2bn in comparison to the year before.

PSNB as a percentage of GDP was at 80.9% in December 2014.