UK posts smaller than expected deficit in August

Britain ran a smaller than expected budget deficit last month but borrowing in the financial year to date rose by more than a quarter ahead of the country’s planned departure from the EU next month.

Office for National Statistics said, public sector net borrowing in August totalled 6.418 billion pounds, excluding public-sector banks, down from 6.917 billion in August 2018 and below economists’ forecast (7.15 billion pound deficit).

Looking at the five months since the start of the current tax year in April, borrowing was up 28% percent from the same period in 2018.

Tuesday’s figures reflected a change in the ONS’s treatment of student loans, to take account that around half of them will not be repaid. This added 12.4 billion pounds to the borrowing figures for the 2018/19 financial year that ended in March, the ONS said.

Along with corrected corporation tax data and changes to the way public sector pensions are recorded, the ONS estimated the deficit excluding public sector banks for 2018/19 at 41.4 billion pounds rather than 23.6 billion previously — or 1.9% of GDP instead of 1.1%.