By David Williams
20 November 2009
Latest data on the public sector finances show that government borrowing is continuing to expand, and suggest that Treasury predictions have underestimated the scale of the deficit.
Figures released on November 19 show that this year’s budget is £7.7bn in deficit – compared with a £2.2bn surplus a year earlier. Public sector net borrowing was £11.4bn. In October 2008, it had been £100m.
Overall public sector debt is now worth £829.7 bn, the equivalent of 59.2% of gross domestic product. This represents a modest increase the September 2009 figure of £824.8bn.
Central government tax receipts were 9.1% down in October 2009 compared with October last year, and receipts for the seven months of the financial year were 10% lower than for the same period a year ago.
The Institute for Fiscal Studies pointed out that Chancellor Alistair Darling’s April Budget predicted that central government receipts for 2009/10 would be 7.8% down on 2008/09.
Spending was up 10.2% in October on a year ago, and 6% higher over the months since April – this year’s Budget predicted an increase of 7.5% across the tax year.
Gemma Tetlow, senior research economist at the IFS said: ‘The trends are still broadly in line with Darling’s Budget forecast for borrowing £175bn for the year as a whole. However with five months of the financial year left to run, there remains considerable uncertainty about the final outcome.’
In a normal October, the UK government is a net lender, not a net borrower, because it receives a large proportion of its annual Corporation Tax income in that month.
However, Tetlow added, last month’s Corporation Tax receipts were 25% lower than the year before.
20 November 2009
Latest data on the public sector finances show that government borrowing is continuing to expand, and suggest that Treasury predictions have underestimated the scale of the deficit.
Figures released on November 19 show that this year’s budget is £7.7bn in deficit – compared with a £2.2bn surplus a year earlier. Public sector net borrowing was £11.4bn. In October 2008, it had been £100m.
Overall public sector debt is now worth £829.7 bn, the equivalent of 59.2% of gross domestic product. This represents a modest increase the September 2009 figure of £824.8bn.
Central government tax receipts were 9.1% down in October 2009 compared with October last year, and receipts for the seven months of the financial year were 10% lower than for the same period a year ago.
The Institute for Fiscal Studies pointed out that Chancellor Alistair Darling’s April Budget predicted that central government receipts for 2009/10 would be 7.8% down on 2008/09.
Spending was up 10.2% in October on a year ago, and 6% higher over the months since April – this year’s Budget predicted an increase of 7.5% across the tax year.
Gemma Tetlow, senior research economist at the IFS said: ‘The trends are still broadly in line with Darling’s Budget forecast for borrowing £175bn for the year as a whole. However with five months of the financial year left to run, there remains considerable uncertainty about the final outcome.’
In a normal October, the UK government is a net lender, not a net borrower, because it receives a large proportion of its annual Corporation Tax income in that month.
However, Tetlow added, last month’s Corporation Tax receipts were 25% lower than the year before.
