By Richard Johnstone | 19 July 2013
Revised borrowing figures for 2012/13 show the government managed to cut the deficit by £2bn compared to the previous year, the Office for National Statistics said today.
The latest update stated that underlying public sector net borrowing for the year, excluding one-off payments to the Treasury, is now estimated to be £116.5bn, while the estimate for 2011/12 remains unchanged at £118.5bn.
Today’s Public Sector Finances report from the ONS has reversed last month’s revisions, which indicated that underlying borrowing rose year-on-year. The downward correction is mainly due to a £2.3bn increase in estimates of tax receipts, the ONS stated.
The Treasury said the figures showed the coalition’s ‘tough decisions’ to deal with the deficit had succeeded in getting borrowing down last year.
A spokesman said: ‘While we can and will take nothing for granted, the economy is moving from rescue to recovery – the economy is growing and the deficit and unemployment are falling.’
Public sector borrowing figures for June were also published today. Excluding one-off payments from the Bank of England’s Asset Purchase Facility, borrowing was £12.4bn in the month, £500m higher than the year before. Around £3.9bn was transferred from the bank’s quantitative easing account in the month, the ONS said, as part of the government’s move to claim the excess from the account.
Analysing the monthly figures, the Office for Budget Responsibility said central government tax receipts increased by £1.2bn in June, but this was offset by higher central government spending of the same amount. Borrowing by local authorities was up £700m on a year earlier, while for public corporations it was down £200m.
The Institute for Fiscal Studies senior research economist Rowena Crawford added that the figures created ‘a complicated picture’.
The increase in both receipts and spending by central government in June was quicker than had been forecast by the Office for Budget Responsibility for the year as a whole. However, both had been affected by changes in the timing of payments, she added.
‘Spending by central government includes transfers to local government, which have been much more frontloaded in this financial year than previously, while particularly high income tax receipts at the start of this financial year are likely to reflect some high-income individuals moving part of their income from the last tax year into the current tax year so as to benefit more from the reduction in the top rate of income tax from 50p to 45p.
‘These timing effects illustrate the difficulties in inferring the likely outcome for borrowing in 2013/14 from only three months’ data. That said, the government is likely to take some heart from June’s figures, which show that combined receipts from income tax, national insurance and capital gains tax grew in line with the forecast for the year as a whole.’
