UK government borrowings threaten AAA sovereign rating

The level of the UK government's borrowings exceeded expectations in December, which could result in chancellor George Osborne missing his target set out in the Autumn statement, economists have warned. This would also threaten the country's AAA rating.

According to the Office for National Statistics, public sector net borrowing excluding financial sector interventions, the government's preferred measure were up last month to £15.4 billion from £14.8 billion a year earlier, as the pace of growth in spending increased over income in a struggling economy, hurting  efforts to erase a large budget deficit.

Apart from the impact of the transfer of £28 billion of assets from the Royal Mail's pension funds in April, borrowings excluding financial interventions were at £106.5 billion in the first nine months of financial year 2012-13, 7.3 per cent up from £99.3 billion in the corresponding period in 2011-12.

However, this was only £2 billion off the budget watchdog's forecast of £108.5 billion in the 2012-13 tax year, which is to end in April. However, this is not likely to deter financial market speculation over the UK losing its coveted triple-A credit rating, which stood with negative outlook with all three main ratings agencies.

In the event the trend were to continue over the rest of the financial year, borrowings would hit around £130.5 billion, exceeding the government target of £119.9 billion.

Government departments and ministeries were yesterday ordered to prepare a new round of spending cuts that would bite,  in view of the borrowings putting Britain's AAA credit rating under fresh pressure