UK Oct. public sector borrowing rise more than expected

UK public sector borrowing rose more than expected in October, raising doubts over the coalition government's ability to meet its spending cut estimates.

Britain’s public sector net borrowing, excluding the effects of financial interventions, totaled £10.3 billion ($16.3 billion) in October, up £0.2 billion ($31 million) compared with the same month last year, the Office for National Statistics (ONS) said on Thursday.

Markets had expected UK’s net borrowing to be at £9.6 billion ($15.2 billion) in October.

Including the temporary effects of financial interventions, net borrowing stood at £9.8 billion ($15.5 billion) in October, up £0.4 billion ($63 million) on annual basis.

In its emergency budget in June, the coalition government proposed fiscal consolidation amounting to £113 billion ($179 billion) per annum by 2014-2015.

However, in the first seven months of the fiscal year 2011, cumulative borrowing totaled £81.6 billion ($129.5 billion), down £5.9 billion ($9.3 billion) compared with April-October 2009.

The budget deficit in September stood at £6.5 billion ($10.3 billion), up £0.4 billion ($63 million) compared with September 2009.

Net debt in October accounted for 57.1 percent of gross domestic product, up from 49.3 percent in October 2009.

The government set out plans to achieve fiscal consolidation through public spending cuts of around £84 billion ($133 billion) and tax hikes worth £29 billion ($46 billion). It plans to increase tax revenues mainly by raising value added tax (VAT) from 17.5 percent to 20 percent by January 2011.

According to the UK Office for Budget Responsibility's (OBR) forecast, Britain will see 500,000 public sector job losses by government spending cuts.