Most economists had predicted the figure would come in at Â£12.51billion; but it instead shot up to Â£15.9 billion. Official data showed that interest payments on gilts rose because of higher levels of inflation. The pound barely moved in reaction to the data.
Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments, says, âTax receipts are still rising so Chancellor Osborne wonât have to revise his current borrowing forecasts yet, although he will be disappointed by the overshoot. Whilst the data is concerning, the fact that sterling barely reacted suggests that the markets are reassured by the Coalitionâs promises to reduce public borrowing.
âThe markets are willing to give the Coalition the benefit of the doubt for now, but the pressure is on for them to deliver a credible austerity package without choking off economic growth.â
Chancellor Osborne sets out his austerity plans on 20th October.