UK borrowing less than expected in August

The government borrowed less than expected in August, official figures

Public sector borrowing for the month was £13.2bn, the Office for National Statistics (ONS) said, lower than the £14.4bn recorded in August 2012. The UK’s net public debt pile stands at £1.19 trillion, which is equivalent to 74.6% of GDP. The government is aiming for a deficit of no more than £120bn this year. Efforts to reduce UK borrowing and cut the country’s debts are central to the government’s economic policies.show, helped by a fall in spending by government departments.

But Chancellor George Osborne has faced criticism as the deficit reduction plan has stalled, thanks in part to weak economic growth.

‘Painfully slow’

The government’s latest target is to eliminate the structural deficit by the end of the 2017-18 financial year – three years behind the original schedule. The government hopes that a recovery in the economy will boost tax receipts, helping it meet its borrowing targets.

According to the ONS, tax revenues so far this tax year have been 2.8% higher than the same period of 2012. The UK economy grew by 0.7% in the second quarter of this year, and is widely forecast to continue growing for the rest of the year. The August figures also suggest the public sector finances were being helped by the government’s austerity measures.

Total spending by central government – excluding investment – fell by 2.2%, led by a sharp drop in departmental spending.

“The improvement in economic growth seen in recent months will help to reduce the deficit further, but progress remains painfully slow,” said David Kern, chief economist at the British Chambers of Commerce.

“Our ability to generate tax revenues will struggle to return to pre-recession levels, even when the pace of growth picks up. As a result, the government must continue to make cuts in current spending in order to reduce the deficit further.”