By Richard Johnstone | 21 February 2014
Public sector borrowing is on course to fall faster than forecast in 2013/14 despite a lower-than-expected surplus in January, the Office for Budget Responsibility has said.
Analysing the figures published the Office for National Statistics today, the OBR said underlying borrowing was down by £4bn so far this year, compared to the same ten months in 2012/13, to stand at £90.7bn. This is after one-off payments from the Bank of England’s quantitative easing programme to the Treasury have been removed.
Government receipts in the first ten months of the year were higher than expected, at 5.2% compared to a forecast of 4.6%, thereby taking the pressure off borrowing. By contrast, central government current expenditure increased by only 1.3%, compared to the OBR’s full year forecast of 1.9%.
The in-year borrowing fall is despite the smaller-than-expected January surplus.
According to the ONS, the public sector recorded a £4.7bn surplus in the month, the busiest time of the year for tax receipts, once cash transfers to the Treasury are excluded. This is £1.3bn lower than the surplus recorded in the same month in 2013, and below market expectations by around £3.5bn
But it remains likely that borrowing will come in below the OBR’s updated forecast for the year of £111.2bn (compared to £114.8bn in 2012/13) as there would need to be an increase of £400m in borrowing in February and March compared to last year to reach this total.
This would be ‘a departure from the trend over the year to date’, the OBR stated. However, uncertainty remains over the degree to which Whitehall departments will underspend against the spending plans in the final two months of the year.
