Public sector borrowing last month was £11.8bn, a record for the month of February, while UK CPI inflation hit 4.4% and Retail prices hit a 20 year high at 5.5% . The pound has risen against a host of major currencies as a result.
Inflation figures are way above the Bank of England’s 2% target, and this has increased speculation that we may see an interest rate hike in May. Personally I think it’s more likely to be in the second half of the year, but the figures certainly make it a difficult decision for the Monetary Policy Committee members at the bank of England who have to make the decision.
The official government borrowing figure, provided by the Office for National Statistics, was nearly double the £6.9bn forecast by economists and analysts.
Public sector net borrowing now stands at £123.5bn for the financial year so far, and while today’s figure of 11.8 is awful, the government remains on course to meet the £149bn borrowing total forecast for the full year. While the latest months borrowing may be a cause for concern, the fact that the government is still on target, is viewed as good news for the UK economy and subsequently sterling.
The pound has lost a fair bit of ground vs. the Euro recently, but has spiked up in the last few days against the US Dollar, currently trading at a 13 month high. If you need to move Euro’s in the next few days, or dollars over the next few months, now may be the perfect time to reserve a rate. For more information or to speak to a currency specialist, fill in the form on the right.