UK Budget Deficit Widens in September Limiting Stimulus For Britain’s Finance Chief

The UK budget deficit widened more than expected in September and was on course to miss the target set by the country’s public finances watchdog.

The unexpected increase will likely complicate the task of Philip Hammond, the British finance chief, who said he’s looking into ways of how fiscal policy can soften the blow from the vote to leave the European Union.

The September shortfall increased to 10.6 billion pounds ($12.9 billion,) from 9.3 billion pounds in the same month a year earlier, the Office for National Statistics said on Friday. It compared with a median forecast of 8.5 billion pounds in Reuters poll of economists.

The deficit for the first six months of the fiscal year that started in April was 45.5 billion pounds, 5% lower than in the same period last year, the ONS said. Even so, it accounted for 82% of the 55.5 billion pound full-year forecast by the Office for Budget Responsibility.

Hammond is preparing for his autumn statement in parliament scheduled for Nov. 23 and had hinted at measures to stimulate the economy, which is forecast to slow next year due to the uncertainty surrounding the negotiations about Britain’s departure from the EU. He had already played down speculation regarding the scope of the measures.

Britain’s public sector net debt, excluding public sector banks, was 1,63 trillion pounds, 83.3% of gross domestic product (GDP,) up 39.5 billion pounds compared with September 2015, the ONS said.

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