UPDATE 1-UK Christmas retail sales slide, pressure on public finances eases

* Discounts, weather drive first retail spending drop since2009

* Full-year sales volume growth strongest since 2004

* Stronger taxes push Dec public borrowing far belowforecast

* Full-year deficit reduction goal still looks a challenge (Adds detail from releases, economists' reaction)

By David Milliken and Ana Nicolaci da Costa

LONDON, Jan 22 (Reuters) - British consumers reined in theirChristmas spending by the biggest amount in over six years butthere was more cheer for finance minister George Osborne aftergovernment borrowing dropped sharply, official data showed onFriday.

The retail numbers added to signs that Britain's economy slowed late last year, and Osborne will still struggle to meethis budget goals for the tax year which ends in March.

British consumers have been a big driver of the economy at atime of weak external demand, but Friday's data raise questionsabout whether they will sustain expansion as wage growth slows.

Reflecting discounting and mild weather which hurt clothingsales, the value of retail sales in December was 1.0 percentbelow spending a year earlier, the first fall since May 2009.

The figures broadly tally with the message big retailers,whose industry body, the British Retail Consortium, gave earlierthis month that Christmas sales had been disappointing.

Some clothing retailers, notably market leader Marks &Spencer and Next, posted disappointing updates,partly blaming the weather although supermarkets generally didbetter than expected in the holiday period.

Clothing sales were down more than 4 percent on the year inDecember, the biggest drop since April 2012, the Office forNational Statistics said.

For the fourth quarter as a whole, however, growth in salesvolumes picked up to a one-year high of 1.1 percent, suggestingconsumer spending will support broader fourth-quarter economicdata due next week at a time when other sectors are fading.

Sales volume growth in 2015 overall was the fastest in 11years, but analysts expect it to slow in 2016.

"The recovery in spending will lose some momentum as jobgrowth fades from recent stellar rates, inflation strengthensand the fiscal squeeze intensifies," Samuel Tombs, chief UKeconomist at Pantheon Macroeconomics, said.

FISCAL PRESSURE

Osborne will need to tighten the fiscal screws before thetax year ends in March if he is to meet his goal of cutting thebudget deficit to 73.5 billion pounds ($105.2 billion), or 3.9percent of GDP.

Data on Friday showed public borrowing in the first ninemonths of the tax year had already exceeded the target, reaching74.2 billion pounds -- though this still represented the lowesttotal since 2007, before the financial crisis.

January typically brings a large budget surplus as annualincome tax payments fall due, and December's borrowing of 7.5billion pounds was much less than forecast, down sharply from11.7 billon in December 2014 and the lowest since 2006.

Stronger tax receipts helped break two months of budgetdisappointments in October and November, as did a rareyear-on-year fall in the cash amount of government spending.

"The fall in borrowing in December should afford thechancellor a slightly more comfortable night's sleep over theweekend," Sam Alderson, an economist at consultancy CEBR, said.

But he said Osborne still looks likely to miss his borrowingtarget. Britain's budget watchdog said the government needed torun a 5.5 billion-pound surplus over the next three months,compared with a 4 billion-pound deficit over the same periodlast year.

The Office for Budget Responsibility said higher income taxreceipts and property transactions taxes would probably pick upin the final few months of the year, but that "considerableuncertainty nonetheless remains".

Osborne warned earlier this month that Britain faced a"cocktail of risks" from abroad, and said again on Friday thatit was essential to stick with the deficit-reduction plan thathas been his political lodestone since taking office in 2010. ($1 = 0.6984 pounds) (Reporting by David Milliken; Editing by Toby Chopra)