UK Borrowing Higher than Projected 2012.03.21

March 21, 2012 16:46

The Office for National Statistics (ONS) Wednesday reported the United Kingdom’s public sector net deficit grew to £11.1 billion in February 2012, £4.3 billion greater than the deficit a year ago. The amount was more than Economistsforecasted at £5.0 billion and a record high monthly add with £6.3 billion more than February 2011. As a result, borrowing for the first 11 months of the fiscal year accumulates to £110 billion. As well, net debt comes in at£995 billion at the end of February 2012 or 63.1% of gross domestic product (GDP) whereas February 2011 net debt amounted to £877.3 billion (58.8% of GDP).Despite these things, Chancellor of the Exchequer George Osborne rejects proposals to reduce his program of cuts, according to Fitch Ratings and Moody’s Investors Service they warn that the region may lose its top credit rating.

 

In other news, Statistics Zealand provided the country’s deficit was $2.0 billion in the December 2011 quarter, $0.8 billion less than the September 2011 quarter deficit.  This was largely the result of a higher goods surplus with the exports of dairy products the highest contributor at $0.6 billion. "Exports of dairy products reached record-high levels this quarter," balance of payments manager John Morris said. A lowering in the country’s investment income also contributed to the lowered account deficit. Spending by overseas visitors increased to $1.8 billion in the latest quarter. The county’s account deficit through the end of the period stood at 8.3 billion (4.0% of GDP).

The GBPNZD has rallied higher as the British Pound strengthened against commodity currencies. The pair is testing resistance near 1.9400. This level has been tested three times this month but the pair has failed to break above that level. If the pair breaks above that level, we expect the GBPAUD to rally higher towards 2.0000

 

Eugene Ross, Analyst

Admiral Markets

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