UK Govt exceeds Its Annual Borrowing Target

The UK government borrowed more than expected in March, official figures have shown, but still met its borrowing target for the year.

Public sector net borrowing, excluding interventions such as bank bail-outs, came in at £18.2bn in March, the Office for National Statistics (ONS) said.

However, previous months’ borrowing was revised down, meaning the government met its target of £126bn for the year.

On Wednesday, figures will show how the economy performed in the first quarter.

They will show whether or not the UK economy is in recession, defined as two consecutive quarters of contraction.

The economy shrank by 0.3% in the last quarter of 2011.

Most analysts had expected borrowing of about £16bn in March.

But the higher figure of £18.2bn was more than offset by a £3bn downward revision to February’s data.

Borrowing for the period from April 2011 to January 2012 was also revised up by £800m.

The ONS said in its latest release that most of the revisions were driven by revisions to central government data.

This included a £1.1bn upward revision to income tax by HM Revenue and Customs, consisting of repayments and recoveries relating to the introduction of a new PAYE computer system in June 2009.

Adam Chester, UK economist at Lloyds, told the BBC there would be “a small sigh of relief” at the Treasury.

But he added that the longer-term worry, with net debt excluding the effect of government interventions topping £1 trillion, was that if market sentiment changed, the UK could see a “vicious” upward change in government bond yields which could increase the cost of borrowing.