By Jonathan Davies

The first private firm to run an NHS hospital has announced it wants to "withdraw from its contract".

Circle Holdings, which managers Hinchingbrooke hospital in Cambridgeshire, said the contract is "no longer viable under current terms".

Circle said it comes as a result of funding cuts and greater pressure on A&E; an issue felt across a number of NHS hospitals in England over the festive period.

Funding has been cut by 10.1% this year, Circle said.

Circle began running Hinchingbrooke in 2012 as it faced closure. The Department of Health said it was "disappointed" by Circle's decision.

Chief executive Steve Melton said: "This combination of factors means we have now reluctantly concluded that, in its existing form, Circle's involvement in Hinchingbrooke is unsustainable."

Under the contract, Circle has the right to end the deal if the money it has put into the hospital trust is more than £5m. So far, Circle has paid £4.84m to the trust, meaning it would have to make a final payment of at least £160,000 to withdraw from the contract.

Following the news, Circle's share price fell by more than 25%.

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