Britain’s budget deficit narrowed more than forecast in December as government spending fell, suggesting Chancellor of the Exchequer George Osborne’s fiscal squeeze is gaining traction.
Net borrowing excluding support for banks was 13.7 billion pounds ($21.3 billion) compared with 15.9 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 17 forecasts in a Bloomberg News survey was 14.9 billion pounds.
Osborne has pledged to stick to his plans for the deepest cuts since World War II as European nations struggling to tame deficits see their credit ratings lowered. Tackling the budget deficit is being made harder by slowing economic growth, which is hitting tax revenue. Net debt rose above 1 trillion pounds last month for the first time since records began in 1993.
“The figures are better than expected and it looks like the chancellor will meet his forecasts,” said Philip Shaw, an economist at Investec Securities in London. “If we see a revival on the economy the plans will remain on track. If not, he’ll have to rethink.”
The pound eased against the dollar following the report and was trading at $1.5542 as of 9:45 a.m. in London, down 0.2 percent on the day.
