–Adds Detail To Version Transmitted At 0830 GMT
–Sep PSNB-X Stg14.138bn vs Stg15.411bn in Sep 2010
–Sep PSNCR Stg19.883bn vs Stg12.133bn in Sep 2010
–Sep Current Budget-X -Stg11.929bn vs -Stg12.815bn in Sep 2010

LONDON (MNI) – Public Sector Net Borrowing fell in the year to
September as spending growth virtually ground to a halt, figures
released from National Statistics showed Friday.

PSNB-X, which excludes financial sector interventions, fell to
Stg14.138 billion in September from Stg15.411 billion in the same month
a year earlier. This was a little below the median for a Stg14.5 billion
outturn.

Borrowing in August was also revised lower from an originally
published record Stg15.934 billion to Stg13.703 billion.

It is difficult to argue the public finances are in a healthy
state, but these latest figures at least show borrowing heading in the
right direction.

The main reason for the decline in borrowing is spending growth
which has slowed to just 0.5% on the year to September. For the
financial year to date spending growth was just 2.9% compared with the
same period a year earlier, below the Office for Budget Responsibility
March forecast of 3.6% for the full year.

While spending growth remains in line with forecasts, revenue
growth is still below the OBR’s forecast. For the year to September
revenue growth stood at 4.9%, below the OBR’s forecast of 6.9% for the
year as a whole.

Following the large downward revisions to borrowing in the first
few months of 2011-12 revealed last month, the public finances are
looking far better than they previously were. Still, with growth
stagnating it is difficult to see tax receipts picking up enough to
ensure the OBR’s full year forecast is met.

The current budget deficit excluding financial sector interventions
fell to Stg11.929 billion in September from Stg12.815 billion in
September 2010.

The central government net cash requirement, the key determinant
for gilt issuance, fell to Stg23.012 billion in September from
Stg25.095 billion in the same month a year ago.

The public sector net cash requirement has become a less reliable
measure, because of distortions caused by the lack of reliable data in
the latest months for the government’s holdings in banks.

The PSNCR ballooned to Stg19.883 billion in September from
Stg12.133 billion a year ago, but National Statistics against placing
weight on this figure.

A National Statistics official also noted borrowing is pushed up in
September as it is a key month for gilt coupon payments.

–London bureau: 0044 20 7862 7491; email: drobinson@marketnews.com

[TOPICS: M$B$$$,MABDS$]