Bank Forex Fines Help Boost Public Finances

Public borrowing tumbled last month as income tax receipts grew and bank fines helped boost Treasury coffers.

The Office for National Statistics (ONS) said public sector net borrowing, excluding state-controlled banks, fell to £14.1bn in November, down 10%, or £1.6bn, on the same month last year.

It said the Government's finances were boosted by the £1.1bn in fines imposed on HSBC, Royal Bank of Scotland (RBS), Citi, JP Morgan and UBS last month for the manipulation of foreign exchange markets.

That total is on course to rise, given comments by the chief executive of Barclays to Sky News this week that the £500m it has set aside to cover its own looming settlement will not be sufficient.

The borrowing figure for November meant that the total amount borrowed during the first eight months of the financial year was £75.8bn - £500m lower than was achieved in the same period in 2013.

It marked the first time in 2014/15 that the year-to-date public finances have been in better shape than the same period a year before.

The Chancellor admitted during his Autumn Statement to MPs earlier this month he will not meet his original target for cutting the budget deficit in 2014/15.

The new target figure - £91.3bn - while higher than expected, is below last year's total.

Weaker-than-hoped-for tax receipts have been the major factor behind the revised target.

Income tax receipts have been down largely because of weak pay rises though wage growth is now starting to pick up.

The Government is hoping some of the shortfall will be made up in January when it is expecting tax payments from high earners on bonuses that were deferred in the previous financial year to avoid the old 50p tax rate.

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