Britain's public finances last month marked their worst September since records began although borrowing remains relatively stable in the fiscal year to date, official data showed on Wednesday. Rising government spending caused the deterioration in the public sector net cash requirement last month, which hit 10.8 billion pounds and was the worst for any September since records began in 1984, the Office for National Statistics said. That PSNCR was higher than 8.5 billion in September last year, when government spending was unusually low, and compared with forecasts of 8.2 billion. But in the fiscal year to date, the public sector net cash requirement was 18.6 billion pounds, down from 22.3 billion in the same period a year ago. September is traditionally a month where the government sees relatively low tax receipts and higher government expenditure.
While spending was up in September, total government receipts were up 6.7 percent at the mid-point of the fiscal year, not far off where Chancellor of the Exchequer Gordon Brown predicted they would be in the budget earlier this year. "The first glance is disappointing but not disastrous," said Philip Shaw, chief economist at Investec. "So far this year the public finances have been better than expected so it looks like the Chancellor will meet his golden rule for the cycle." Financial markets did not react to the report, instead focusing on minutes to the Bank of England's October meeting. The government's preferred accruals-based measure of the public finances -- public sector net borrowing -- also rose on a year ago to a new September record, up to 4.8 billion pounds from 2.5 billion in September last year. But in the fiscal year so far, the PSNB was 22.75 billion pounds, already more than half the 33 billion Brown has forecast for fiscal 2004/05, but up only slightly from 22.1 billion pounds at the same point one year ago. "We remain firmly on track to meet our strict fiscal rules," a Treasury spokesman said. A sharp 32.4 percent rise in interest payments on the month was due to a shift in the timing of coupon payments on British government bonds, or gilts, the ONS said.///