George Osborne needs a 'Christmas miracle' to hit deficit target after shock November rise in borrowing

A shock rise in borrowing has left Chancellor George Osborne needing a “Christmas miracle” to hit his deficit-cutting target this year, experts have warned.

The surprise £1.3 billion rise to £14.2 billion rise in November — 10% ahead of the same month last year — confounded City predictions of a fall and takes cumulative borrowing for the eight months of the financial year so far to £66.9 billion.

That is just £2 billion below the latest £68.9 billion target for the entire year set by the Office for Budget Responsibility financial watchdog in the Autumn Statement, before the impact of moving housing associations onto the public balance sheet is taken into account.

Paul Hollingsworth, UK economist at Capital Economics, said: “If we assume that the trend seen so far this year continues, then borrowing for 2015/16 as a whole would come in at around £81 billion.

“The upshot is that, barring a Christmas miracle, the Chancellor looks extremely unlikely to meet his borrowing forecasts this year.”

The public finances were flattered a year earlier by a host of banks paying out £1.1 billion in fines over the forex-rigging scandal.

But even stripping out this one-off, the improvements are sluggish. Overall receipts grew by £500 million or 1.1% to £46.3 billion over the month, mainly accounted for by a £400 million surge in corporation tax compared to last year.

But VAT and income-tax receipts grew far more slowing and the figures showed government borrowing rising more than twice as fast as the tax take last month.

Central government spending hit £58 billion in November — up £1.6 billion, or 2.9%, compared to 12 months earlier.

The detailed figures showed “other” spending — mainly government departments — up £1.2 billion as the UK’s contribution to the European Union virtually doubled to £2.1 billion last month.