"The UK's fiscal position is heading towards a more stable condition than many had feared. Public sector net borrowing for the month is estimated at around £11.5bn, lower than market expectations and the same period a year earlier. This outcome reflects a combination of steady tax receipts and a gradual easing in some areas of spending pressure. While December is typically a heavy borrowing month, as borrowing looks high because cash outflows peak before major tax receipts arrive,"
"For the wider state of government finances, the December figures offer cautious reassurance. Borrowing remains elevated in absolute terms, but the trend is moving in the right direction. Slowing inflation and moderating earnings growth are beginning to reduce upwards pressure on public sector spending, particularly on inflation-linked items. At the same time, the economy has shown tentative signs of resilience, with GDP rising by 0.3% in November - higher than expected - helping to underpin revenues."
"The implications for government bond markets are broadly positive. Lower-than-expected borrowing should reassure investors that the Government's long-term fiscal strategy is sustainable. Combined with the hope of an interest rate cut in Spring, this supports a more stable outlook for gilt yields. While yields are likely to remain sensitive to global developments, the near-term risk of sharp upward pressure appears to have diminished."
Public sector net borrowing in December was about £11.5bn, lower than market expectations and equal to the same month a year earlier. Steady tax receipts and a gradual easing of some spending pressures contributed to the outcome. December borrowing typically appears high because cash outflows peak before major tax receipts arrive. Slowing inflation and moderating earnings growth are reducing upward pressure on inflation-linked spending. GDP rose 0.3% in November, supporting revenues. Lower borrowing supports a more stable gilt yield outlook and increases flexibility for upcoming fiscal decisions, although long-term debt and public service funding challenges remain.
Read at London Business News | Londonlovesbusiness.com
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