19th December 2014
Fines imposed on some of Britain’s biggest banks for rigging foreign exchange rates have helped wipe 10% off UK borrowing figures over the past year.
Banks were fined £1.1 billion in total for manipulating currency markets which has helped reduced public sector net borrowing 10% to £14.1 billion, figures from the Office of National Statistics reveal.
Between April and November public borrowing stood at £75.8 billion, or 0.6% less than last year, but chancellor George Osborne will still find it tough to meet deficit targets for the year.
Earlier in the year, the Office of Budget Responsibility increased its borrowing forecast for the current financial year from £86.6 billion to £91.3 billion after tax receipts were lower than expected.
The figures are expected to improve somewhat in January as self-assessment forms are returned, with high earners who have deferred their bonuses likely to take advantage of the cut in the highest rate of income tax.
However, the Institute of Directors chief economist James Sproule warned: ‘One swallow does not make a summer, and although the figures are moving in the right direction we have to remember that public sector borrowing for the financial year so far is only very slightly down on last year.
‘The budget is being balanced slowly, but this is being done on the back of a heavy tax burden. The government will only be able to decrease this burden if fiscal consolidation continues.’