Roundup: UK public borrowing fells in October

Data released on Tuesday showed the UK government borrowing has performed better than expected in the immediate wake of Brexit.

But the encouraging figures are not enough to reverse sluggish tax revenues in the early part of the year and still show that the government will break its borrowing target for this financial year.

In October the government borrowed 4.8 billion pounds (about 5.95 billion U.S. dollars), according to the Office for National Statistics (ONS). This is 1.6 billion pounds less than a year before, and is also below economists' expectations of 6 billion pounds of borrowing.

However, the annual borrowing target for 2016/17 set by the former chancellor of the exchequer George Osborne in his March budget aimed for public borrowing to be 16.7 billion pounds lower at this point in the year than it was at the same time in 2015, but it is now only 5.6 billion pounds (about 10.3 percent) lower.

The official government data body, the Office of Budget Responsibility (OBR) forecast that for the government to meet its 2016/17 spending targets it needed to reduce borrowing by 27 percent by the end of the financial year in March.

"One month of good borrowing figures do little to compensate for the poor trend in the first half of the fiscal year," said Sam Tombs, chief UK economist at Pantheon Macroeconomics, an economic intelligence firm.

Although the figures are encouraging they will have an impact on new chancellor Philip Hammond and his fiscal policy, which he will unveil in the annual autumn economic statement, due on Wednesday afternoon.

Tombs said the public finance data "provided very little relief for the chancellor" ahead of his first major public statement of government economic policy following the Brexit vote on June 23.

October's unexpected improvement was underpinned by a 6.8 percent year-on-year rise in tax receipts, exceeding the 5.1 percent full-year rise anticipated in Osborne's March budget.

Income tax receipts grew by 7.5 percent, while corporation tax receipts rose 23 percent, with some firms paying the second of four instalment payments on their expected 2016 profits.

This could be a positive Brexit effect, with UK firms which have substantial overseas operations or which do a lot of business in U.S. dollars feeling the benefit of the 17 percent fall in sterling against the dollar since the June 23 vote.

Paul Hollingsworth, UK economist with Capital Economics, said: "While manufacturing is still benefiting from a competitiveness boost arising from the lower pound, there is still a lot of uncertainty about future trading relationships." (1 pound = 1.24 U.S. dollars) Endit