Despite economists predicting that in December the UK’s shortfall excluding government support for banks would come in at 15.2 billion Pounds, the latest data from the Office for National Statistics has shown that public sector net borrowing (excluding financial sector interventions) increased to 15.4 billion Pounds.
That’s 0.6 billion Pounds more than in the same period of 2011.
The data also showed that in the first three quarters of the fiscal year the deficit grew to 106.5 billion Pounds, 7.2 Billion Pounds more than a year earlier, and the Office for Budget Responsibility is now envisaging an underlying deficit of 120 billion Pounds by the end of the fiscal year.
An economist with IHS Global Insight commented: ‘The recent poor public finance data are fuelling high and mounting expectations that at least one of the credit rating agencies will strip the U.K. of its AAA rating within the next few months. Markets aren’t yet prepared to charge a significant country risk despite its deepening problems. However, the situation is getting more uncomfortable’.
The three top ratings agencies (Moody’s, Fitch, and Standard and Poor’s) have already downgraded the UK’s outlook to negative, and given the current economic climate and new fears that the cold snap could push Britain into a triple-dip recession, the nation’s coveted AAA rating could well be seen as teetering on the edge.
The Pound experienced little movement immediately after the report was released.
The Pound to Euro exchange rate is currently trading at 1.1865
The Pound to US Dollar exchange rate is currently trading at 1.5841
The Pound to Australian Dollar exchange rate is currently trading at 1.4982
The Euro to US Dollar exchange rate is currently trading at 1.3345
The Euro to Pound exchange rate is currently trading at 0.8425
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