Today’s economic news from the UK will see the December Public Sector Net Borrowing. Investors expect to see a significant improvement to the upcoming release with expectations that the borrowing dropped to £15.2 billion in December, from £17.5 billion November last year (excluding financial interventions). The PSNB data for November incidentally posted the worst performance in the public sector during the last six months.
The UK’s public debt to GDP rose to 68.5% in November 2012, up from 64.1% during the same period last year (November 2011).
The treasury collected lesser revenues to the tune of 8.6% lesser from corporate taxes compared to a year ago. The falling curve in corporate tax receipts was partly due to substantial decrease in oil and gas production in the North Sea which is a significant contributor to the UK’s treasury.
The PSNB December data is expected to be released by the ONS at 0930 GMT.
UK’s government was forced to borrow more cash to sustain its public sector expenses on account of volatile growth and a weak export sector and few receipts in corporate tax. The bleak outlook forced UK Chancellor George Osborne to announce that the government would miss its debt target during his Autumn statement.
To fill the fiscal gap, the government transfered its cash earned from the interest payments deposited in the BoE’s asset purchase facility and was transferred to the treasury’s coffers estimated to reach £35 billion by next march.
Earlier this month ratings agency Fitch warned that the UK’s coveted Triple A rating would come under significant risk after the announcement of missing the debt targets by Chancellor Osborne. A downgrade to the UK’s credit ratings would mean that the government would face higher costs in borrowing from the international markets.
Other major news from the country will see the Q4 GDP report due out on Thursday with existing figures pointing to a shrinking GDP. The already released retail sales figures showed a dismal performance. Furthermore a weak outlook from the manufacturing sector, especially on account of the snow-induced loss of working days could potentially put a dent on the Q1 2013 GDP estimates.