By Jon Sindreu and Nick Winning
LONDON--The British government borrowed more than expected in
September, increasing the risk that it will overshoot
budget-deficit targets it set as part of its sweeping
government-spending cuts.
The U.K. government borrowed GBP11.8 billion ($19 billion) for
the month, excluding public-sector banks, up from GBP10.3 billion
in September 2013, according to official figures released Tuesday
by the Office for National Statistics. Many economists expected
borrowing needs to decrease slightly.
The rise in borrowing is a headache for Treasury chief George
Osborne who has promised to eliminate the U.K.'s government deficit
by the fiscal year ended in March 2019. To do that, total public
borrowing would need to be GBP96 billion for the 12-month period to
March 2015, estimates the Office for Budget Responsibility--the
U.K.'s independent fiscal watchdog. But six months into the fiscal
year, borrowing is already 60% of that level.
Mr. Osborne, who is Chancellor of the Exchequer, and his close
ally Prime Minister David Cameron took office in 2010 promising to
wrestle down the U.K.'s budget deficit by reigning in government
spending. Their credibility in handling the economy will be a key
issue in the next general election, scheduled for May.
The borrowing figures are "disappointing," said Rowena Crawford,
an economist at the Institute for Fiscal Studies, a London-based
think tank. Ms. Crawford, like many other economists, anticipates
that borrowing needs will decrease in the coming months thanks to
some expected deferred income tax and a forecast increase in wages.
While Mr. Osborne still has time to reign in borrowing as the
election nears, he may have less scope for maneuver, some
economists say.
One issue for Mr. Osborne has been lower-than-expected revenues
from income taxes, which have failed to pick up as many workers
have yet to see an increase in their salaries despite the economy
picking up.
Much of the increase in borrowing in September was due to
central government departments, which saw spending increase by 5.4%
over the prior-year period while revenues only rose by 3.1%.
A Treasury spokesman, in a statement Tuesday, attributed the
increased borrowing to the continuing impact of the recession and
said the U.K. was vulnerable to the problems being experienced by
economies in Europe and elsewhere. The spokesman said the U.K. was
growing faster than other large economies, adding jobs, and the
government had reduced the deficit by more than a third since it
took office. He said these were signs that "the government's
long-term economic plan is working."
Economists expect the U.K. economy to show continued growth when
gross domestic product figures are reported Friday, albeit at
likely a slower rate than the 3.2% increase in GDP in the second
quarter, over a year earlier.
The U.K. government's debt is 79.9% of GDP, excluding public
sector banks--slightly above what was forecast in the March budget
for the whole fiscal year. Four years ago, in September 2010, the
figure was below 54% of GDP.
"These figures are a serious blow to George Osborne," said Chris
Leslie, a spokesman on the economy for the main opposition Labour
Party. "Not only is he set to break his promise to balance the
books by next year, but borrowing in the first half of this year is
now 10% higher than the same period last year."
Write to Jon Sindreu at jon.sindreu@wsj.com and Nick Winning at
nick.winning@wsj.com