Bank fines swell Treasury coffers

Chancellor George Osborne
Chancellor George Osborne

Bank fines for rigging the foreign exchange market helped boost the public finances last month as George Osborne battles to meet annual deficit targets, official figures show.

Public sector borrowing – excluding the effect of bank bailouts – was £14.1 billion in November, better than expected and £1.6bn lower than in the same month last year.

Treasury coffers were swollen by £1.1bn in penalties from banks fined by the Financial Conduct Authority (FCA), figures from the Office for National Statistics (ONS) showed.

It meant borrowing for the April-November period representing the financial year-to-date was £75.8bn, about £500m lower than for the same period last year.

This is the first time in 2014/15 that the year-to-date shape of the public finances has been better than the same period a year before.

The Office for Budget Responsibility (OBR) is forecasting a six per cent fall in the annual deficit for the year to March.

This was revised down earlier this month from a tougher target of 11 per cent after disappointing income tax receipts.

The latest figures deliver a boost to the Chancellor as he tries to deliver the goal.

Banking fines, which have been spread over November and December but are all being counted in November’s public finance figures, have helped borrowing so far in 2014/15 to swing lower.

However the April-November borrowing figure is still only 0.7 per cent lower than in 2013/14.