British public borrowing was lower than expected in December, helped by an increase in cash tax receipts, but still hit record highs for the month and financial year to date, official data reveals today.
The Office for National Statistics said the public sector posted a net cash requirement of £23.60 billion sterling last month, a record high for the month but below analysts' forecasts for a reading of £26 billion.
The government's preferred accruals-based measure of public sector net borrowing came in at £15.719 billion, also a December record but again below expectations for £18.75 billion.
The figures were helped by a second consecutive annual rise in monthly cash tax receipts and analysts said that trend could continue as the government raised VAT in January, but warned that major fiscal tightening was still needed.
The UK government expects borrowing to come in at £178 billion this year, topping 12% of gross domestic product, but has pledged to halve its deficit over the next four years.
In a sign that the pressure on public finances may be starting to ease, total current receipts on an accrued basis fell by 0.4% in December to £37 billion - the smallest year-on-year decline since September 2008.
On a cash basis, receipts were 1% up on the year in December at £30.7 billion. However, there was some way to go. Tax receipts in January are likely to be a lot lower than last year because they will reflect annual income tax payments for the 2008/09 tax year, when the economy was in recession, as opposed to January 2009, when tax payments for 2007/08 reflected a healthier economy.
The ONS said that total net borrowing reached 61.7% of GDP in December, the highest since records began in 1974. Excluding the government's bank bailouts, however, net debt was 52.5% of GDP.
