By Richard Johnstone | 20 June 2014
Public sector borrowing in May was £13.3bn, up £4.6bn from the same month last year, figures from the Office for National Statistics have revealed today.
According to the ONS’ first estimate, the monthly deficit rose due to there being no transfer from the Bank of England’s Asset Purchase Facility Fund in the month. By contrast, £3.9bn was transferred in May 2013.
If these one-off payments are excluded, the year-on-year increase was only £700m, the figures state.
According to the Public sector finances May 2014 report, central government’s borrowing was £4.4bn higher than the same month in 2013. This was mostly due to current receipts being £3.4bn lower, at £42.1bn. By contrast, current expenditure only increased by £100m.
Also today, the ONS announced a further downward revision to 2013/14 full financial year borrowing figures. The latest estimate is that net borrowing, excluding one-off payments to the Treasury, was £107bn. This is £400m lower than last month's estimate, and is now £8.1bn lower than 2012/13.
Responding to the figures, a Treasury spokesman said: ‘The government’s long-term economic plan is working, delivering economic security for hardworking people.
‘Today’s public sector net borrowing figures continue to be in line with the Budget forecast which predicts the deficit to have halved by the end of the year. But the job is not done which is why we must continue to work through the plan that is building a resilient economy.’
Labour’s shadow chief secretary to the Treasury Chris Leslie highlighted that borrowing in the financial year to date, excluding one-off transfers was £24.2bn, around £1.9bn more than the same period in 2013/14.
‘Borrowing is now expected to be almost £190bn more than planned under this government. This is the cost of three damaging years of flatlining and falling living standards we have seen since the election.
‘Labour will balance the books and get the national debt falling as soon as possible in the next Parliament, but we will do so in a fairer way. And we will act to secure a strong and balanced recovery that delivers rising living standards for the many, not just a few at the top.’
Alasdair Cavalla, economist at the Centre for Economics and Business Research, said market expectations were that £12bn would be borrowed in May.
‘With year-on-year GDP growth now at 3.1% in the latest (Quarter 1 2014) figures, the recovery is boosting certain areas of taxation compared to a year ago,’ he said.
‘Taxes on production, of which VAT is an important component, registered a 5.5% rise on last year, helped along by retail sales growth of 3.9%. Corporation tax receipts were up by 17.5% year-on-year.
‘However, the squeeze on incomes meant that income and capital gains tax showed a 1.4% fall, and as this is a large component of government receipts, it helped central government receipts fall by 7.5% over the year from last May.
‘Public sector expenditure showed a small 0.3% rise over the year to May. Net social benefits, the largest component of spending, was down 0.8% on last May, which helped to keep the total down.’
