Public sector borrowing in December was £2.9bn more than in the same month last year due to a controversial payment the government had to make towards the European Union’s budget, it has been revealed.
Figures published by the Office for National Statistics today also showed that borrowing in the first nine months of the financial year stood at £86.3bn, only around £100m less than over the same period in the 2013/14.
According to the ONS, borrowing in December, excluding the bailed-out banks, stood at £13.1bn, an increase of £2.9bn on the pervious year.
This was matched by a £2.9bn contribution to be made by Westminster, following a European Commission demand for a net £1.7bn in additional funding based on revised economic growth figures.
Although this payment has been accounted for last month, it will not be paid until later this year, while a refund of £1.2bn – also based on previous additional contributions related to gross national income revisions – will be made to reach £1.7bn. In addition, there is to be an increase in the UK’s rebate, estimated at around £800m.
Analysing the figures, the Office for Budget Responsibility said that in order for borrowing to meet its £91.3bn forecast for the full fiscal year, borrowing in the remaining three months needed to be £5.9bn lower than in the same period last year. In 2013/14, the government borrowed £95.6bn, but had an underlying £107.8bn deficit if cash transfers from the Bank of England’s Asset Purchase Facility were removed.
The OBR said it expected tax receipts to grow towards the end of the year, with receipts from self-assessment income tax and capital gains tax forecast to be £4.3bn higher in the remaining three months compared to 2013/14.
‘This largely reflects the shifting of liabilities due to the reduction in the additional rate of income tax to 45p affecting self-assessment and the rise in asset prices during 2013.14 affecting CGT,’ the OBR’s Commentary on the Public Sector Finances stated.
‘We also expect the £1.2bn accrued refund related to the £2.9bn additional EU contribution to score later in 2014/15,’ it added.
