Government borrowing higher than expected in December but annual borrowing falls to 16-year low

Government borrowing came in higher than expected in December as the UK received less money back from the EU.

Public sector net borrowing climbed to £3bn in December, £300m higher than the same month in 2017 and more than the £1.9bn City economists had expected.

The Office for National Statistics said this was partly due the UK’s net contribution to the EU budget being £1.5bn higher in December compared with the previous year.

It said December often saw “atypical” payments between the EU and member states and 2017 saw a significant surplus of £1.2bn returned to the UK.

Year-to-date borrowing for 2018/19 stood at £35.9bn – the lowest level in 16 years.

“The long-term improvement in the public finances continued in December, although government borrowing in the month itself was higher than expected and up on December 2017, at £3bn,” PwC senior economist Mike Jakeman said.

“However the uncertainty around Brexit means there is less clarity on the outlook for government spending than we would usually expect,” he added.

The latest figures bring the total national debt – excluding public sector banks – to £1.8tn, 84 per cent of GDP, down from 84.5 per cent in December 2017.

CEBR economist Alastair Neame said: “Today’s data is the latest in a string of positive news regarding the UK’s fiscal position – as public sector finances have strengthened throughout the year.

“The outlook looks less clear as slower growth will make meeting the Treasury’s fiscal mandate harder to achieve.