Britain's public sector debt hits record high in November

Britain's national debt reached a new record high in November, as the UK's public sector borrowed more than expected, official figures released on Wednesday (21 December) showed.

Although the amount borrowed was smaller than in the previous month, continuing the recent trend of a gradual improvement in the public finances, the national debt hit a new record high of £1.655trn ($2.04trn), equivalent to 84.5% of GDP.

According to the Office for National Statistics (ONS), public sector net borrowing, excluding public sector banks, fell £0.6bn to £12.6bn last month from the corresponding period in 2015. The figure, however, was £400m higher than analysts expected.

In the financial year-to-date, public sector net borrowing, excluding public sector lenders, fell 11% year-on-year to £59.5bn, short of the fall of around a quarter for the year as a whole expected by the Office for Budget Responsibility (OBR) in March, but close to the 10% reduction that it forecast in November.

In his first autumn statement, the Chancellor Philip Hammond said the government would have to borrow more over the next five years, to compensate for a decline in tax revenues in the wake of the Brexit vote and for a smaller economy.

According to figures from the OBR, total government debt will peak at 90.2% in 2017-18 before falling gradually to 89.7% in 2019.

However, Scott Bowman, UK economist at Capital Economics explained the recent improvement was a much-needed boost for the government.

"Looking through some of the monthly volatility, receipts growth has been on a slight upward trend since May – adding to the evidence that the economy has held up well following the vote to leave the EU", he said.

Howard Archer, chief UK and European economist at IHS Markit said: "This is welcome for Hammond as it would have been somewhat embarrassing if the first set of public finance figures after the November Statement had immediately put question markets over his new fiscal targets."