By Richard Johnstone | 22 June 2011
The public sector borrowed £17.4bn in the month of May, a fall of more than £1bn from a year ago.
But the figure, released by the Office for National Statistics yesterday, is higher than in April, which hit a record for the month of £10bn.The provisional estimates by the ONS also show that for the two months of the financial year to date, borrowing was £27.4bn, £1.5bn higher than in the same period last year. However, last April’s figure was reduced by the Labour government’s £3.5bn Bank Payroll Tax.
The ONS figures, which exclude the government’s financial rescue of the banks, also show that net national debt is £920.9bn, equivalent to 60.6% of gross domestic product.
The Office for Budget Responsibility has said the fall in borrowing compared with last May’s £18.5bn reflects £2.9bn higher receipts than last year. The OBR forecasts that public borrowing will total £122bn in the current financial year.
Rowena Crawford, research economist at the Institute for Fiscal Studies, said the figures were broadly in line with OBR forecasts.
‘The figures suggest that while spending on welfare payments has grown more quickly than implied by the OBR forecast, this has been roughly offset by lower growth in central government spending on public services. But as these data only relate to two months of the financial year they do not provide much guide as to how the public finances will evolve over the whole year,’ she said.
Year on year, government expenditure grew 4% over the two months to May, and Centre for Economics and Business Research said there was ‘little evidence of the public sector cuts as yet’.
CEBR managing economist Charles Davis said the government still had ‘a long road ahead to achieve deficit reduction’.
He added: ‘Although monthly data are volatile, so far the deficit in fiscal year 2011/12 is running ahead of last year as growth in public spending continues to outpace tax receipt income growth. If the UK’s macroeconomic performance continues to be as underwhelming as in recent months, public borrowing is likely to exceed the OBR’s forecast of £122bn in 2011/12.’
• Kate Barker, a former Bank of England Monetary Policy Committee member, and Lord Terry Burns, former Treasury permanent secretary, have both been appointed the first non-executive members of the OBR.
Announcing their appointment yesterday, Chancellor George Osborne said: ‘They will have key roles to play in supporting the leadership and independence of the OBR, strengthening its governance and ensuring that it delivers its important objective of examining and reporting on the sustainability of the public finances.’
OBR chair Robert Chote added: ‘I am delighted that Kate Barker and Lord Burns have agreed to serve as our first non-executive members. I have no doubt that they will hold us to the highest standards of conduct and performance.’
