Business

EU budget payment pushes up UK borrowing

European Commission HQ Image copyright Getty Images
Image caption The £2.9bn payment will eventually be reduced by refunds and rebates

UK government borrowing rose to £13.1bn in December, official figures show, largely as a result of a £2.9bn payment to the European Commission budget.

Figures from the Office for National Statistics show public sector net borrowing rose from £10.3bn a year earlier.

From April to December borrowing was £86.3bn, down slightly from the £86.4bn borrowed in the same period a year ago.

The government's borrowing target for the year to April 2015 is £91.3bn.

Although the budget contribution payable to the European Commission appears in the government's December accounts, the actual money will only be paid later in 2015.

Refunds

A UK Treasury spokesperson said: "This is simply an accounting exercise and there has been no change to the final agreement on the additional EU contribution made in November last year."

That agreement means the £2.9bn will eventually be reduced by existing refunds and rebates from the EU down to about £850m.

Income tax and capital gains tax receipts rose 3.1% from a year earlier, the strongest December increase since 2010.

David Kern, Chief Economist at the British Chambers of Commerce said: "It is disappointing that public sector borrowing in December was again higher than a year ago.

"The current trends suggest that it will be difficult for the government to meet its target for this financial year, although there could be a significant improvement when the January figures - which will include significant income tax payments from businesses to the exchequer - are published next month."

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