- Howard Archer, IHS Economics
British government borrowing unexpectedly increased in December due to hefty contribution to the European Union budget as well as a rise in central government spending. UK's public borrowing rose to 13.1 billion pounds in December, up from 12.4 billion pounds in the preceding months and against to the City's expectations of 9.2 billion pounds. The UK's government was obliged to pay 2.9 billion pounds to the European Commission in December. While central government receipts rose 2.3% or 1.1 billion pounds, central government spending increased 6.2% or by 3.5 billion pounds largely due to a rise in capital transfers within the public sector. The Office for National Statistics said that stamp duties, corporation tax and VAT receipts rose, though income tax receipts were weaker than expected. Reduction of deficit has been one of the main priorities of UK's Conservative-led coalition since it assumed power in 2010, and is one of the main issues of the Finance Minister George Osborne's political campaign ahead of May's national election.
Separately, UK's total industrial orders fell in January, as the nation's economy continued to lose some steam. The factories; total orders balance dropped to +4%, compared with +5% a month earlier, while on a quarterly basis, orders jumped to +20%, the Confederation of British Industries said. The survey of 467 companies also revealed that employment continued to rise in the sector.
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