UK borrowing figures give Hunt some room for tax cuts

A view of the London financial district seen from Waterloo Bridge in London, Britain, August 26, 2023. REUTERS/Kevin Coombs/File photo Acquire Licensing Rights

LONDON, Nov 21 (Reuters) - Britain borrowed less than expected by its budget forecasters in the first seven months of the financial year, data showed a day before finance minister Jeremy Hunt is expected to announce some tax cuts as part of his plan to speed up the sluggish economy.

Government borrowing between April and October totalled 98.3 billion pounds ($122.49 billion), the Office for National Statistics (ONS) said on Tuesday.

The figures meant borrowing was running about 22 billion pounds higher than in the same period last year but almost 17 billion pounds less than the Office for Budget Responsibility (OBR) forecast in March, giving Hunt some fiscal room for manoeuvre.

Prime Minister Rishi Sunak - who is expected to call an election next year - said on Monday that his attention was turning to tax cuts after a slowing in Britain's high inflation rate and stronger tax revenues.

But Sunak stressed he would tread carefully to avoid the risk of reviving inflation. He vowed there would be no repeat of last year's promises of huge tax cuts that sent the bond market into a meltdown and cost Liz Truss her job as prime minister.

Moreover, the OBR is expected to lower its economic growth outlook, making it harder for the government to meet its target of bringing debt down as a share of gross domestic in the last year of the OBR's forecast period.

The ONS said that in October alone, public sector net borrowing, excluding state-owned banks, was 14.9 billion pounds last month.

A Reuters poll of economists had pointed to public sector net borrowing, excluding state-owned banks, of 12 billion pounds in the month.

The figure was also higher than the OBR's forecast for borrowing of 13.7 billion pounds in the month.

($1 = 0.8025 pounds)