British state borrowing drops in December: official data

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The British government's borrowing dropped markedly in December but still stood at a hefty £16.8 billion (19.5 billion euros, $26.5 billion), official data showed on Tuesday.

The figure compared with borrowing of £21 billion in December 2009, according to the Office for National Statistics (ONS). Market expectations had been for a deficit of £18 billion in December, according to Dow Jones Newswires.

November's shortfall was revised down to £21.1 billion from an initial estimate of £23.3 billion, the ONS added in its statement.

"The public finances show modest overall improvement so far during fiscal year 2010/11 and the government is currently on course to meet its public finance targets for the year," said Howard Archer, an economist at the research group IHS Global Insight.

"Much will clearly depend on how well growth bounces back in the first quarter of 2011 after the shock contraction in the fourth quarter of 2010," he added.

The ONS also revealed on Tuesday that Britain's economy shrank by a shock 0.5 percent in the final three months of last year, dashing expectations for growth, as freezing weather sparked the first contraction since 2009.

© 2011 AFP

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