The U.K. public sector net cash requirement amounted to GBP 4.4 bln in February, slightly higher than our forecast of GBP 3.5 bln, which was already above our median of GBP 3.0 bln. Public sector net borrowing amounted to GBP 9.0 bln, slightly less than our forecast and median of GBP 10.0 bln. U.K. public finances are set to deteriorate sharply this year and in 2010 as the economy slows and the government slackens fiscal policy, but even now, before the full effects of the recent credit crunch intensification has been felt, public finances are very weak.
Meanwhile, U.K. M4 money supply was up 1.4% m/m and 18.8% y/y, versus 2.5% m/m and 18.8% y/y in the previous month. M4 lending amounted to GBP 21.7 bln. M4 money supply continues to grow rapidly, but this is on the back of holdings by OFCs (other financial corporations), while the non-financial corporate sector is displaying negative M4 growth and households are showing weak growth to money growth.