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Public sector borrowing worse than expected despite slight fall

By Ben Woods

Published 22/06/2016

George Osborne
George Osborne

George Osborne is facing a set-back in his efforts to shore up the nation's finances after borrowing reached a worse-than-expected £9.7bn last month.

The Office for National Statistics (ONS) said public sector net borrowing, excluding public sector banks, fell £0.4bn in May compared with the same month last year, but failed to meet economists' expectations of £9.5bn.

The ONS added public sector net debt, excluding banks, rose £49.6bn to £1,606.9bn over the period, the equivalent to 83.7% of gross domestic product (GDP).

It also noted that the Chancellor was now judged to have borrowed £74.9bn for the complete financial year ending in March 2016, meaning he overshot his annual target by less than previously thought.

The ONS said in May that public sector net borrowing for the financial year had hit £76bn - a £2bn rise on its initial estimate.

The Office for Budget Responsibility (OBR) had forecast borrowing to hit £72.2bn for 2015/16. It means Mr Osborne has now missed this target by £2.7bn.

The Chancellor has pledged to return the UK to a surplus by 2020, with the OBR forecast stating that the UK would have a budget surplus of £10.4bn in 2019/20 and £11bn the year after.

However, Mr Osborne has already been blown off course, with borrowing in the current financial year to date hitting £17.9bn - a £0.2bn jump compared with 2015.

It comes despite Government tax receipts rising over the period by 3.4% to £103.8bn.

The Government's coffers were boosted in the main by stamp duty on land and property, which surged by just over a fifth to £2.1 billion in the period.

But this was swallowed up by a 2.1% rise in Government expenditure to £119.7bn between April and May this year as net social benefits, net investment and debt interest costs all increased.

Samuel Tombs, chief UK economist of Pantheon Macroeconomics, said the public finance figures for May "cast more doubt" over whether Mr Osborne could achieve a budget surplus by the end of this parliament.

Belfast Telegraph

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