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exiges

Public Sector Net Borrowing Widens

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Last month: £8bn

Forecast: £16bn

This month: £23bn

One key measure of the public sector fiscal position is public sector net borrowing. This is derived by subtracting the public sector current budget from public sector net investment. The public sector current budget is calculated by subtracting current expenditure from current receipts. In November 2010, there was net borrowing (excluding financial interventions) of £23.3 billion, which compares with borrowing of £17.4 billion in November 2009.

Public sector net borrowing (excluding financial interventions) was £104.4 billion in the year to date for 2010/11, down from

£105.1 billion in the same period last year. The OBR’s Economic and Fiscal Outlook (November 2010) forecast for 2010/11 is net borrowing of £149 billion.

The current budget (excluding financial interventions) showed a deficit of £19.9 billion in November 2010, compared with a deficit of £14.0 billion in November 2009.

More generally, the public sector recorded deficits between 1991/92 and 1997/98 before moving into surplus in 1998/99. Deficits have been recorded since 2002/03.

Public sector net debt (excluding financial interventions) was £863.1 billion (equivalent to 58.0 per cent of GDP) at the end of November 2010. This compares to £708.6 billion (50.0 per cent of GDP) as at the end of November 2009.

The unadjusted measure of public sector net debt (including interventions), expressed as a percentage of gross domestic product (GDP), was 65.2 per cent at the end of November 2010 compared with 59.5 per cent at end of November 2009. Net debt was £971.0 billion at the end of November compared with

£843.6 billion a year earlier.

Edited by exiges

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9:36, Tuesday 21 December 2010
LONDON (
Reuters
) - Public sector net borrowing
unexpectedly surged
in November (Berlin: NBXB.BE - news) to its highest on record, due to higher health, defence and EU spending, official data showed on Tuesday.

Highest on record and also "unexpected," again.

1 GBP 1.54926

Edited by Realistbear

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Seriously, how can this be a surprise?

Well, for anybdy listening or reading the mainstream media, maybe

The mantra: Tory cuts

Didn't cut it for anyone prepare to look at the Nov pre-budget report documents that showed that public expenditure was set to

RISE

Edited by Arbitrage

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All the proposed cuts seem to be happening in 2012/13. Even when cuts are announced in a big fanfare the proposals are watered down within a few weeks due to media or political pressure. Aside from a few jobs lost at local government level the coalition do not seem to have the stomach for what is really required.

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Here's the monthly borrowing figures and you can see how much higher the November figure is than last year.

As Philip Shaw of Investec says, this is probably a rogue figure, but if it represents a more fundamental deterioration, then we've got a problem.

psnbm1110.gif

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Updated chart (public sector net borrowing including financial sector interventions):

psnb1110.gif

That does not look good.

Do they give any explanation for it??

Are these numbers adjusted by inflation?

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That does not look good.

Do they give any explanation for it??

Are these numbers adjusted by inflation?

The figures aren’t adjusted for inflation.

Basically tax receipts were only up marginally on last year, and this was wiped out by higher interest costs. Meanwhile government expenditure in November was up by 8% on last year.

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The figures aren't adjusted for inflation.

Basically tax receipts were only up marginally on last year, and this was wiped out by higher interest costs. Meanwhile government expenditure in November was up by 8% on last year.

What deteremines the interest costs?

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What deteremines the interest costs?

Outstanding government debt and the rate it’s paying on the debt.

QE muddies the waters a bit though. The govt is effectively paying interest to itself on some of the debt because of the BoE’s gilt holdings.

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Outstanding government debt and the rate it's paying on the debt.

QE muddies the waters a bit though. The govt is effectively paying interest to itself on some of the debt because of the BoE's gilt holdings.

I thought that was detemined at the auctions.

The vast percentage of debt will be unchanged?

As TOW pointed out with inflation hight the amount paid out for National Savings will have increased, but not by much.

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I thought that was detemined at the auctions.

The vast percentage of debt will be unchanged?

As TOW pointed out with inflation hight the amount paid out for National Savings will have increased, but not by much.

Free Trader is right, that the BoE lent to the Gov., reducing the Gov.'s need to get money in these past auctions.

But the BoE can't keep doing that, as it increases the money in circulation (they just print it), and if they over do it, we would/will have inflation. But even before that, all lenders are watching this QE stuff, and it reduces the UK Gov./BoE's credibility, already increasing the cost of future auctions.

A doubled edged sword. It works only in the short term, or in deflationary scenarios, but not in ... well, now, with inflation going up. they can't (shouldn't) QE any more.

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I thought that was detemined at the auctions.

The vast percentage of debt will be unchanged?

As TOW pointed out with inflation hight the amount paid out for National Savings will have increased, but not by much.

Not sure I get your point.

The rate is determined at auctions and for conventional gilts the payments will be fixed, but of course the outstanding debt is constantly growing, so the interest bill is rising.

Interest on the £220bn of index-linked gilts outstanding isn’t fixed (the rate is fixed, but interest payments rise with inflation).

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Slightly off topic...

We keep borrowing money yet it keeps going to the short term speculators. Want to know why oil and gas are getting more expensive? See attached Lehman brothers employee claim. Remember socialise the losses but keep the short term profits! If this is how people were paid you can see how tiny fiefdoms within firms took excessive risks!

The banksters are stealing in the name of creating liquidity but the reality is that they are the market makers and they only set the prices to benefit themselves!

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00000114951.pdf

Edited by katchytitle

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