By Vivienne Russell | 22 October 2013
Public sector borrowing for the current year looks set to undershoot the Office for Budget Responsibility’s forecasts, according to public finance figures released today.
The figures give an indication of the shape of the public finances for the first six months of the 2013/14 financial year. Borrowing, at £56.7bn, has come in £5.9bn lower than the same period last year, the OBR said, although the size of any possible undershoot ‘remains very uncertain’. At the Budget in March, the OBR predicted borrowing of £119.8bn in the current financial year.
While public finances had been buoyed by a 7% hike in central government tax receipts, particularly from stamp duty and corporation tax, this had been offset by weaker North Sea oil receipts over the first six months of the year, the OBR said.
It added: ‘Income tax continues to be held down by weak earnings growth. As always, the outlook for the full year is clouded by the fact that data for central government spending and borrowing by local authorities and public corporations is volatile and prone to significant revision.’
Elsewhere, the figures revealed that borrowing for September was £11.1bn, £1bn lower than it was in the same month last year.
In addition, borrowing for the whole of 2012/13 has again been revised down to £115.4bn, £3.1bn lower than it was in 2011/12. These figures exclude the temporary effects of financial interventions and also exclude the transfers from the Royal Mail Pension Plan and the Bank of England’s Asset Purchase Facility Fund.
Commenting on the figures, Rowena Crawford, senior research economist at the Institute for Fiscal Studies, said: ‘Today’s figures continue to suggest a relatively positive outlook for the public finances this financial year, with borrowing having grown less quickly so far this year than the OBR forecast for the year as a whole. ‘However, in large part this is due to trends in public sector net investment and borrowing by local government and public corporations, which can be particularly volatile.’
She added the growth in tax receipts should be viewed with caution, as it could reflect the decision by some high-income individuals to push part of their income from the last tax year into the current one, to take advantage of the reduction in the higher rate.
Looking forward to the next set of figures, which will relate to October, the OBR said these would be affected by the government’s sale of shares in Royal Mail.
‘The income from the sale will reduce the central government net cash requirement in a relatively straightforward manner, but the impact on public sector net borrowing and net debt is more complex and are subject to future ONS decisions,’ it said.
