Britain's official borrowing to rise more than expected

29th November 2011, Comments 0 comments

Britain will borrow more than expected over the next five years owing to weak economic growth, official data showed on Tuesday, putting a dent in government plans to slash the public deficit.

Public sector net borrowing is forecast to hit £127 billion ($198 billion, 149 billion euros), or 8.4 percent of gross domestic product (GDP), in the financial year ending in April, the Office for Budget Responsibility forecast.

That was higher than the OBR's estimate of £122 billion published in March.

It also raised its borrowing forecast for over the next five years to £111 billion, taking the total amount to £479 billion by 2016/17.

"The downward revisions to our growth forecasts mean that the deficit will also shrink less quickly over the coming five years," the OBR said in an official statement.

State borrowing was predicted to fall to 7.6 percent of GDP in 2012/13, 6.0 percent in 2013/14, and to 4.5 percent in 2014/15.

British finance minister George Osborne said cutting Britain's deficit was "not happening as quickly we had wished because of the damage done to our economy because of the ongoing financial crisis.

"But we are set to meet our budget rules and we are going to see Britain through the debt storm," he told parliament on delivering his autumn statement.

The public sector had borrowed £141.1 billion in 2010-11.

Also on Tuesday, the OBR slashed its economic growth forecasts.

GDP was predicted to expand by 0.9 percent this year, about half the prior guidance for 1.7-percent growth.

The economy then is expected to grow by just 0.7 percent next year, sharply lower than the previous official forecast of 2.5 percent, the OBR added.

Britain is a member of the European Union but not of the eurozone.

© 2011 AFP

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