Belfast Telegraph

UK Website Of The Year

Public borrowing falls to lowest since 2008 as tax receipts rise

By John-Paul Ford Rojas

Published 22/07/2015

The figures for public sector borrowing are the first to be released since Chancellor George Osborne's budget two weeks ago
The figures for public sector borrowing are the first to be released since Chancellor George Osborne's budget two weeks ago

Public sector borrowing fell by £800m last month to reach its lowest level for any June since 2008, according to official figures.

The Office for National Statistics (ONS) said borrowing - excluding the effect of bank bailouts - was £9.4bn in June.

It was the first set of public sector finance figures since Chancellor George Osborne's summer Budget two weeks ago - which saw independent forecasts pencil in an improved projection for the current fiscal year.

Treasury coffers were boosted last month by a rise in income tax receipts to £11.5bn, the best June performance on record since 1997.

It follows a period in which the income tax take had failed to grow by as much as expected despite the strength of the UK's economic recovery, though it now appears to be making strides.

Meanwhile the corporation tax take of £1.7bn also represented the best June on record.

The monthly figures also saw a £117m boost from a fine paid by Lloyds Banking Group over its handling of payment protection insurance (PPI) complaints.

Latest forecasts from the Office for Budget Responsibility (OBR) suggest underlying borrowing for 2015/16 will fall to £69.5bn from £88.2bn in 2014/15, a fall of 21.2%.

For the fiscal year to date from April to June this year, borrowing stands at £25.1bn, £6.1bn lower than a year earlier and the lowest year-to-date borrowing for the period since 2008/9.

However, the improvement of 19.6% is slightly behind the scale pencilled in by the OBR.

Underlying debt stood at £1.51trn, the highest on record. As a percentage of gross domestic product (GDP) it was 81.5%, just behind last December's record high of 81.6%.

The level was swollen after figures took account of the worse-than-expected state of Government-owned Network Rail's balance sheet, which added £100m to national debt for 2014/15.

A Treasury spokesman said: "These figures show that our deficit reduction plan is working, with cumulative borrowing over £6bn lower than at this point last year.

"We have more than halved the deficit, but with debt over 80% of GDP the job is not done.

"That is why we will continue to work through our long-term plan to achieve a budget surplus in normal times and secure a better economic future for working people."

While the Government claims it has halved the deficit, this relates to borrowing as a percentage of GDP since 2010.

Samuel Tombs of Capital Economics said the fall in borrowing for June was just 8% and if the trend persisted, the 2015/16 borrowing figure would miss the forecast by £2bn. "However, estimates for borrowing in the first few months of the fiscal year should be taken with a pinch of salt. Accordingly, we do not think that June's borrowing figures should ring any alarm bells yet."

Howard Archer of IHS Global Insight said: "While June's improvement was slightly less than had been expected, Chancellor George Osborne is still likely be pleased to see the shortfall on the public finances narrow for a sixth month running."

Belfast Telegraph

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting?

Read More

From Belfast Telegraph