The U.K. Office for National Statistics reported that public borrowing, not including public sector interventions, came in at ₤13.7 billion...
The U.K. Office for National Statistics reported that public borrowing, not including public sector interventions, came in at ₤13.7 billion for December 2011. This was less than the ₤14.9 billion projected by economists and lower than burrowing debt for last year (2010) at ₤15.9 billion. Burrowing for the fiscal year (April 2010-December 2011 thus far) has lowered from ₤114.60 billion to ₤103.29 billion. This provides optimism that the country is in line to reach its fiscal goal for the year ending March 2012. In December (2011) government income was 7.3% higher than the previous year (2010). This came through increased taxation on banks, companies and consumers. Additionally, total expenditures were lower for December 2011 than the previous December by 0.9%. Despite these positives, net debt for the region hit ₤1.0 trillion last month with the public sector net debt rising by 64.2% (as a percentage of gross domestic product [G.D.P.]), both values are the highest seen since recordings started in early 1993.
Chancellor of the Exchequer George Osborne warned that economic growth would become weaker and borrowing greater therefore austerity measures would have to be continued. Markets appear to have faith in the region to achieve its debt reduction to only 8.4% of G.D.P. for the current fiscal year. Yet, the timeline for the projected budget deficit elimination has had two more years added to it due to ensuing European debt issues affecting the country. The O.N.S. projects debt figures will lower in January as the government receives additional tax receipts but expects the figure will likely increase again in February. Analysts expect public sector borrowing to end at ₤127 billion in the fiscal year ending March 2012 rather than the previous ₤122 billion estimated.
The GBPUSD has rallied higher since January 12th when the pair bounced off support at 1.5300. The GBPUSD has high degree of correlation with the EURUSD. If the EURUSD bull run continues, we might see the GBPUSD target resistance at 1.5700. On the other hand if the EURUSD loses steam, we might see the GBPUSD targeting support at 1.5400.
Eugene Ross, Analyst
Admiral Markets
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