Rate of Decline of UK Business Investment Improves

According to the official data published on Friday, December 18th, by the Office for National Statistics, the British public sector borrowing reached a record amount last month, and constituted £20.3 billion, almost £5 billion more than in November 2008.
Even though public sector borrowing in November amounted to less than £23 billion – as expected by economists – the figure still hit a record level. It is worth noting, however, that the last months of the year have traditionally been deficit for the public sector. Total borrowing to date of the public sector amounted to £106.4 billion, up from £49.3 billion seen in 2008.
Despite the fact that the UK Treasury was not surprised by the large amounts of public sector borrowing, as it said the figures were broadly in line with its expectations, economists are determined that the situation is not beneficial for the British economy.
Other reports, also out on December 18th, highlighted that the rate of decline of investments in the sector of private business finally started to slow down. As the figures released by the statistics office show, investments in the private-business sector continued to decline in November, marking the 5th consecutive quarter of falls. The good news is, however, the pace of declines, which, in the opinion of experts, has started to moderate.
According to second estimates, investments in the private-business sector fell by 0.6% and by 19.9% in the 3rd quarter compared to the 2nd quarter of 2009 and the 3rd quarter of 2008 respectively. Initially, business investments were said to have declined by 3% on a quarterly basis, and by 21.7% on a yearly basis.
Let us remind that the decline in business investments seen between the 1st and the 2nd quarter of 2009 was extremely sharp, which means that the steep fall of 0.6% seen in the 3rd quarter of the year might be perceived as a positive sign, suggesting that the worst time for UK private-business sector are over.