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Osborne suffers borrowing setback

By Richard Johnstone | 21 June 2013

Chancellor George Osborne has missed his target to cut public sector borrowing year on year, according to the latest figures from the Office for National Statistics.

Photo: iStock

Government borrowing in 2012/13 was around £300m higher than the previous year once special payments to the Treasury are removed, the ONS has estimated.

Public sector net borrowing figures have been updated for both 2011/12 and 2012/13.

The estimate for 2012/13 is now £118.8bn, which is £100m lower than the previous estimate.

When the one-off payments – transfers from the Royal Mail Pension Fund and the Bank of England’s quantitative easing programme – are included, the gross figure is also £100m lower than last month's estimate at £85bn.

The alterations mean Chancellor George Osborne has missed his promise to have public sector borrowing falling year on year, based on current figures.

Responding to the publication, a Treasury spokesman said the government was taking tough decisions to deal with the deficit. He added that today’s data showed that borrowing was lower than was previously predicted.

‘As the chancellor said this week: the economy is healing ­– the deficit is down by a third, inflation is down by almost half from its peak, and more people are in private sector employment than ever before,’ he added.

In its analysis of the figures, the Office for Budget Responsibility said the increase between 2011/12 and 2012/13 was fiscally and statistically insignificant, and underlying borrowing was broadly flat between the two years. Past experience showed the 2012/13 borrowing estimate remained ‘very provisional at this stage and subject to significant change’, it added.

Borrowing figures for May were also published today. Excluding one-off transfers, £12.7bn was borrowed in the month, compared with £15.6bn in the same month in 2012.

The Institute for Fiscal Studies said the data showed that central government current spending in May was 4.4% lower than in the same month last year, while receipts were 2.7% higher, excluding one-off transfers.

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