25 April 2008
Chancellor Alistair Darling has met his borrowing target for 2007/08 according to the latest public finance figures, providing some much-needed good news for the government on the economy.
The Office for National Statistics said that government borrowing for 2007/08 stood at £35.6bn, just under the £36.4bn prediction given by Darling in last month's Budget. It is up, however, on Gordon Brown's Budget 2007 prediction of £33.7bn over the same period. The figures for March were published on April 19, giving complete data for the past financial year.
Gemma Tetlow, a senior research economist at the Institute for Fiscal Studies, warned that the data did not brighten prospects for 2008/09, with the longer-term outlook remaining poor.
She said that if the International Monetary Fund's prediction of 1.6% economic growth in the UK this year and next proved more accurate than the Treasury's own figures of 1.75% and then 2.25%, it would threaten the government's fiscal rules.
'If the IMF's forecasts are correct, then this could add around £10bn per year to borrowing,' she said.
'A revision of this magnitude would not be large by historical standards or relative to the size of the economy, but it would be problematic for the chancellor as his forecasts give him virtually no room to manoeuvre against either of his two self-imposed fiscal rules.'
In the same bulletin, the ONS reported that at the end of 2007/08 Public Sector Net Debt stood at £527.7bn, or 36.7% of gross domestic product. It also confirmed that the public liabilities arising from the nationalisation of Northern Rock will be included in the next set of public finance data, to be published next month.
PFapr2008
