UK public finances improve in October, remain far off-track

By Andy Bruce and William Schomberg LONDON (Reuters) - Britain's public finances improved slightly in October but finance minister George Osborne is still unlikely to meet his budget goals before next year's general election. Osborne said in March he aimed to slim the budget deficit by more than 10 percent over the following 12 months, helped by Britain's fast-recovering economy. Friday's shortfall was a bit narrower than expected but economists said Osborne's target looks almost impossible to hit. Osborne is due to present a half-yearly budget update on Dec. 3 which will probably include higher borrowing forecasts, leaving little scope to offer sweeteners to voters. "This year's poor borrowing figures ... undermine (Osborne's) argument that the public finances can be restored to a sustainable position after the next election through spending cuts alone," said economist Samuel Tombs from Capital Economics. The Office for National Statistics said public sector net borrowing, excluding state-run banks, totalled 7.706 billion pounds in October, down 2.4 percent from a year earlier. Economists had expected borrowing of 7.9 billion pounds. From April through October, public sector net borrowing excluding banks was 64.1 billion pounds, 6.1 percent higher than in 2013. "October is typically a big month for corporation tax flows. This time around the revenues weren't storming with receipts 1.8 percent up year-over-year," said Investec economist Philip Shaw. Britain's budget has failed to benefit from the economy's recent strength mainly because wages are growing very slowly and many people earn too little to pay income tax. Receipts from income tax and national insurance contributions rose 1.5 percent in October and were only 0.6 percent higher in the first seven months of the financial year. The government has blamed the extra borrowing so far this year on irregular tax receipts in 2013 and expects the differences to even out. Since it came to power in 2010, deficit reduction has been the economic policy priority of Britain's governing coalition. But weak growth in 2011 and 2012 means it will not achieve its original plan to largely eliminate the deficit by 2015. Osborne has said that if the Conservatives win May's national elections - an increasingly uncertain prospect - he will aim to eliminate the budget deficit by 2020, meaning more spending cuts in the coming years. (Reporting by Andy Bruce; editing by William Schomberg/Ruth Pitchford)