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UK public finances not improving as quickly as hoped - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 22, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – James Knightley, Research Analyst at ING, notes that the UK public sector net borrowing (excluding banking groups ) came in at £14.2bn in November versus expectations of £11.8bn.

    Key Quotes

    “This is actually higher than in November last year (£12.9bn). While we have to acknowledge there does tend to be a lot of volatility in the month to month figures, the cumulative borrowing fiscal year to date suggests that Chancellor Osborne is going to struggle to hit his target. So far, FY15-16 to date borrowing is at £66.9bn, which is only $6.6bn lower than in in the same period of FY14-15. The OBR’s full financial year forecast is £73.5bn, but barring a dramatic improvement in the trend, it is looking likely to be missed by possibly more than £5bn.”

    “In terms of the breakdown, there have been good improvements in tax revenue with FY to date figures showing a 4.6% increase in income taxes, 4.1% improvement in VAT and a 6.4% increase in corporation tax, which is confirmation of the good growth and employment figures we have seen over the year.”

    “Things are moving in the right direction, just more slowly than hoped. The new, lower forecast borrowing numbers – a £27bn improvement was announced in the Autumn Statement over the course of the Parliament - look difficult to achieve at this rate. A surplus of 0.5% of GDP in 2019/20 looks a real struggle.”
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