"The recent pick up we've had in the economy should definitely help. We should start to see some of the softer revenues that we've had pick up."
- Victoria Clarke, an economist at Investec Securities
British public sector net borrowing increased more than expected last month, suggesting the government and public corporations spent significantly more than they earned. On Thursday, the Office for National Statistics said that net borrowing, excluding financial interventions, soared to 13.2 billion pounds in August, figure much higher than a surplus of 1.34 billion predicted by analysts. Borrowing advanced sharply even despite an injection from the BoE's Asset Purchase Facility totalling 3.9 billion pounds. Furthermore, government spending jumped 6.7 billion or 2.6% between April and August. The ONS also mentioned that there is currently a constantly increasing expenditure across the board, a figure which expected to be revised in the nearest future. The fact that the economy has gathered some momentum in recent months should help Chancellor of the Exchequer George Osborne to meet his budget targets. At the same time, the Office for Budget Responsibility, predict a shortfall of 120 billion pounds for this fiscal year, a figure equal to 7.5% of GDP.
Even though government spending is on a strong uptrend, George Osborne presented a spending review late in June, showing government's commitment to proceed with extensive fiscal cuts in 2015-2016 in order to push net borrowing back to more appropriate levels. Osborne also pledged that spending would be reduced by 11.5 billion during 2015-2016.
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