UK public finances deficit widens in May

Britain’s public finances deficit widened to a worse than expected £13.34bn in May, making the government’s full-year borrowing target look harder to achieve.

Analysts polled by Reuters expected a deficit of £9.35bn in public sector net borrowing (excluding the temporary effects of financial interventions) and May’s figure was £4.6bn higher than the £8.7bn recorded in May 2013, FTAdviser sister publication FastFT reports.

However, the Office for National Statistics pointed out in its report that the year-ago figures benefited from a £3.9bn transfer from the Bank of England Asset Purchase Facility Fund and receipts from a Swiss tax agreement which totalled £0.9bn. There were no such transfers last month.

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The government wants to reduce its underlying deficit to 5.5 per cent in the current fiscal year, from 6.6 per cent last year, which means borrowing would have to fall by around 11 per cent.

The ONS said that public sector net debt at the end of May was equivalent to 76.1 per cent of gross domestic product.