Both the Institute for Fiscal Studies and the Office for Budget Responsibility will have something to say on the public finances later and I imagine they will say it is too early to draw conclusions on the full-year outturn from the numbers for the first few months.
Even so, there is an overshoot, both for July and the first four months of the fiscal year. In July public sector net borrowing was £0.6 billion, compared with a surplus/repayment of £2.8 billion a year ago. Cumulative borrowing, excluding the Royal Mail and other distortions was £11.6 billion higher than in the corresponding period of 2011-12.
This is the Office for National Statistics’ explanation:
“The April 2012 net borrowing figures include two one-off transactions. The first is a £28 billion transaction to the Government from the transfer of the Royal Mail Pension Plan and the second is a £2.3 billion transaction to the Government from the closure of the Special Liquidity Scheme … If the effect of these two one-off transactions is removed from the public sector net borrowing then PSNB ex in the period April to July 2012 would be £47.2 billion, which would be £11.6 billion higher than in April to July 2011.”
Other highlights: Public sector net debt was £1,032.4 billion at the end of July 2012, equivalent to 65.7% of gross domestic product (GDP) – this is actually £7 billion lower than at the end of June. 2011-12 borrowing is now back to £125 billion – from £128 billion a couple of months ago.
And current spending is still rising quite strongly: “In July 2012, central government accrued current expenditure was £50.2 billion, which was £2.4 billion, or 5.1%, higher than July 2011, when central government current expenditure was £47.8 billion. For the period April to July 2012, central government accrued current expenditure was £212.5 billion, which was £7.3 billion, or 3.5%, higher than in the same period of the previous year, when central government current expenditure was £205.3 billion.”
I’d recommend a glance through the ONS press release, here, and its many footnotes and explanations, for a glimpse of how complicated putting together numbers for the public finances is.
This post was originally published at David Smith’s EconomicsUK and is reproduced here with permission.