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UK government borrows less than expected in October, but worse to come

A person reads a book outside the Bank of England in London

By Andy Bruce

LONDON (Reuters) -Britain's government borrowed less than expected in October, data showed on Tuesday, although the budget deficit is likely to balloon in the months ahead thanks to energy bill support measures and a slowing economy.

The Office for National Statistics (ONS) said headline public sector net borrowing totalled 13.549 billion pounds ($16 billion) last month.

A Reuters poll of economists had pointed to a higher reading of 22 billion pounds, largely because the figures were expected to show large first payments under the government's energy bill support to households and energy suppliers.

Tuesday's data showed a relatively modest 3.4 billion pounds of "other" subsidies - an initial indicative estimate of the energy bill support measures.

That figure excluded the Energy Bills Relief Scheme for businesses, as estimates were not yet available, the ONS said.

Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said the full cost of these measures would show up in the coming months.

"What's more, the downturn in GDP will start to slow the growth rate of tax receipts, and put some upward pressure on benefits spending towards the very end of this fiscal year," he said.

Last week the Office for Budget Responsibility, which provides the forecasts that underpin the government's budgets, said on Thursday the economy was already in recession and would shrink by 1.4% in 2023. ($1 = 0.8447 pounds)

(Reporting by Andy Bruce, Editing by Kylie MacLellan, Paul Sandle and Raissa Kasolowsky)