Osborne’s Budget Challenge Deepens as Deficit Worsens in November

British public finances unexpectedly worsened in November, adding to Chancellor George Osborne’s already tough challenge of hitting his austerity target this year.

But Britain’s top budget forecaster said the deficit was likely to resume falling quickly soon.

Tuesday’s official data showed the budget shortfall in the first eight months of the financial year was already close to Osborne’s full-year objective.

“Barring a Christmas miracle, the Chancellor looks extremely unlikely to meet his borrowing forecasts this year,” Capital Economics economist, Paul Hollingsworth, said.

Osborne, who has more than halved the deficit of about 10 percent of economic output that he inherited in 2010, is aiming to turn Britain’s budget deficit into a surplus by the end of the decade.

That would bolster his credentials as a possible next prime minister and allow for income tax cuts before elections in 2020.

But he has struggled to make headway in recent months, partly reflecting a slowdown in Britain’s strong economic recovery over the past two years.

Headline public borrowing rose to 14.2 billion pounds, 10 percent higher than in the same month last year and way above the median forecast of 11.8 billion in a Reuters poll of economists.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.