UK October Budget Deficit Biggest For Month In 3 Years

The UK budget deficit in October far exceeded expectations and was the biggest for the month in three years, raising the likelihood of the government missing its borrowing target for the fiscal year, official data showed on Wednesday.

The public sector net borrowing, or PSNB, excluding state banks was GBP 8.8 billion in October, which was the highest for the month since 2015, the Office for National Statistics said. Economists had forecast a deficit of GBP 6.1 billion. In September, the deficit was GBP 2.84 billion and the shortfall was GBP 7.23 billion in October 2017.

Though central government receipts increased in October by GBP 2 billion, the growth in expenditure by GBP 4.7 billion far exceeded that.

Much of the increase in spending was in the current account, with notable growth in both the expenditure on goods and services as well as net social benefits, the ONS said. In the April to October period, the PSNB was GBP 26.7 billion, which was the lowest for that period in 13 years. Thus, borrowing is already past the Office for Budget Responsibility's late October forecast of GBP 25.5 billion for the financial year ending March 2019. The public sector net cash requirement, or PSNCR, was a negative GBP 3.3 billion in October versus a positive GBP 18.3 billion in September, the ONS data showed. British Prime Minister Theresa May agreed a draft Brexit deal with the European Union last week. The draft Brexit withdrawal deal sees the UK leaving the European Union on March 29, 2019 and the transition period will begin from that day to last until December 31, 2020. The deal allows for extension of transition beyond 2020. However, May's Brexit deal faces stiff opposition from within her Conservative Party and risks failing in the parliament.