U.K. January public sector net borrowing came in worse than expected with a net lending figure of GBP3.34 bln versus a median estimate of 10.0 bln. Meanwhile, December data was revised to net borrowing of GBP16.5 bln versus 14.9 bln previously. However, the largest surprise of the January public finance data was a net cash repayment of GBP25.08 bln, far better than the Reuters median for 16.0 bln. We had expected a mere GBP3 bln net repayment, taking into account the government's share purchase of almost GBP17 bln in the newly formed Lloyds Banking Group, but the ONS said the purchase had been re-classified. Similarly, the December net cash requirement reading of GBP44.21 bln was revised to just 19.9 bln due to re-classification. Overall, public finance data is still showing deterioration and borrowing is set to surge as the economy deteriorates.



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