UK posts bigger than expected budget deficit in November

LONDON (Reuters) -Britain ran up a higher-than-expected budget deficit of 14.3 billion pounds ($18.1 billion) in November, adding to the strain on the public finances and underscoring the limited room for pre-election tax cuts by Prime Minister Rishi Sunak’s government.

Economists polled by Reuters had expected public sector net borrowing, excluding state-owned banks, of 12.9 billion pounds.

Borrowing in the first eight months of the financial year totalled 116.4 billion pounds, 24.4 billion pounds higher than in the April-November period a year earlier, the Office for National Statistics said on Thursday.

Public sector net debt, excluding state owned banks, stood at 2.67 trillion pounds, equivalent to 97.5% of economic output.

British borrowing surged in recent years, first as the government supported the economy during the COVID pandemic and then as it provided massive aid to households and businesses to offset the surge in energy prices in 2022.

Finance minister Jeremy Hunt last month gave tax cuts to workers and businesses, but only by tightening a squeeze on already stretched public services in the years ahead which analysts say is likely to prove unsustainable.

Yet Hunt and Sunak are under pressure from his Conservative Party to come up with further tax cuts before an election expected in 2024.

($1 = 0.7914 pounds)

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