Winter fuel U-turn pushes UK borrowing above forecast despite 4-year low

Borrowing fell last month to its lowest November level for four years (Alamy/PA) PA Media

UK government borrowing fell to £11.7 billion in November, the lowest for the month in four years. But the figure exceeded economists' expectations of £10.3 billion, with the year's total pushed higher by a policy U-turn on winter fuel payments.

The November borrowing marked a £1.9 billion drop from the same month last year, according to the Office for National Statistics. However, cumulative borrowing for the financial year to date has increased by £10 billion compared to a year ago, reaching £132.3 billion.

The government reversed its initial plan to severely restrict winter fuel payments through means testing. The new policy provides the payout to all pensioners except those earning above £35,000 annually, adding £1.8 billion in spending.

Why borrowing fell in November

Tom Davies, senior statistician at the ONS, said: «Despite an increase in spending, this month's borrowing was the lowest November for four years. The main reason for the drop from last year was increased receipts from taxes and National Insurance contributions.»

Debt interest payments also fell sharply to £3.4 billion, down £200 million year-on-year and the lowest November level in six years.

Higher than forecast

The November figure came in above the Office for Budget Responsibility's March forecast of £8.6 billion. The year-to-date total is £16.8 billion higher than the OBR predicted eight months ago.

The Treasury previously revised borrowing figures for the seven months to October upward by £3.9 billion, partly reflecting the winter fuel payments policy change.

Note: This article was created with Artificial Intelligence (AI).