UK Logs Decade Low Budget Deficit For September

The UK budget posted the smallest budget deficit in a decade for the month of September, suggesting that the borrowing is on the course to undershoot the full-year target.

Public sector net borrowing, excluding banks, decreased by GBP 0.7 billion from the previous year to GBP 5.9 billion in September, the Office for National Statistics said Friday.

This was the lowest September net borrowing since 2007 and also below the expected level of GBP 6.5 billion.

Receipts were boosted by a 3.2 percent rise in income tax and a 3.6 percent increase in the value added tax.

During the April to September period, PSNB decreased by GBP 2.5 billion to GBP 32.5 billion, which was the lowest year-to-date net borrowing since 2007, the ONS reported.

The actual borrowing was well below the Office for Budget Responsibility's full-year forecast of GBP 58.3 billion.

Chancellor of the Exchequer Philip Hammond is set to present his Autumn Budget on November 22.

The OBR looks set to revise down its assumptions about productivity and the UK economy's potential to grow when it publishes its forecasts alongside the Budget, Paul Hollingsworth, an economist at Capital Economics, said.

This will constrain the Chancellor's ability to provide big giveaways in the very near term, the economist added.

Data showed that public sector net debt totaled GBP 1,785.3 billion at the end of September, equivalent to 87.2 percent of gross domestic product.