"The question is how long the U.K. can hold on to its AAA status"
- James Knightley, economist at ING Bank
The British government borrowed slightly more than initially expected in December, adding to concerns that the country will not manage to meet its short-run deficit reduction goals, causing new challenges to the Chancellor of the Exchequer George Osborne. Public sector net borrowing excluding financial interventions soared to £15.4 billion last month, up from £14.8 billion in the same month a year earlier, the Office for National Statistics said Tuesday. The report also showed that government receipts rose 3.6%, while spending grew by 5.4% in December compared with a previous year. However, higher-than-expected borrowing is adding to concerns that the U.K. may lose its prized triple-A credit rating.
"The question is how long the U.K. can hold on to its AAA status," said James Knightley, economist at ING Bank in London. "With the U.S. and France having been downgraded by one ratings agency in the past couple of years, another disappointing U.K. borrowing number and a widely expected contraction in fourth-quarter gross domestic product on Friday will intensify the threat of the U.K. suffering the same fate."
"The fiscal position is likely to drift further off course as the U.K. veers towards a triple-dip recession," said Rob Wood, an economist at Berenberg Bank in London and a former Bank of England official.
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