Downturn in UK public finances forecast ahead of Brexit and elections
Thursday, 21 November 2019
Public borrowing in the United Kingdom reached a five-year high in October and analysts foresee a “net deterioration” in public finances amid preparations for Brexit and a flood of campaign promises for the legislative elections.
Britain’s Office for National Statists said on Thursday that public sector borrowing, excluding nationalised banks such as the RBS, amounted to 11.2 billion pounds (13 billion euros) in October.
This was 2.3 billion pounds more than one year ago, and the largest public borrowing for a month of October in five years.
For the EY Cabinet, British public finances deteriorated sharply in October and seemed set to worsen in the 2019-2020 fiscal year.
Like EY, the Capital Economics research institute does not expect the worst October for public finance in five years to stop the government swept in by the next election from going on a spending spree. Public borrowing seems to have increased more than forecast because of the preparations for Brexit and the budget deficit looks set to increase this year for the first time in a decade, it noted.
The global economic slowdown and the Brexit process, which has lasted for three and a half years, are expected to put pressure on Britain’s economic growth. In its latest global economic forecast, released on Thursday, the OECD sees the UK Gross Domestic Product (GDP) increasing in 2020 by 1.0%, down from 1.2% in 2019.