Government borrowing down £7.7bn in financial year so far

21 Dec 16

Public sector borrowing in the first eight months of the financial year is £7.7bn lower than in the same period of 2015-16, according to the latest figures published by the Office for National Statistics.

The data published by the watchdog for November found that borrowing in the month stood at £12.6bn, down by around £600m from the same month last year.

This means that overall public sector net borrowing (excluding the public sector banks) decreased by £7.7bn to £59.5bn in the year so far.

The government borrowed £76bn in 2015-16 and figures published at the Autumn Statement by the Office for Budget Responsibility forecast the deficit would fall to £68.2bn in 2016-17.
The Autumn Statement also stated that public sector debt would pass 90% of gross domestic product in 2017/18. In today’s figures, net debt (excluding public sector banks) stands at £1,655.1bn, equivalent to 84.5% of GDP.
Responding to the figures, Jack Coy an economist at the Centre for Economics and Business Research said that November’s £12.2bn deficit was above market expectations.

He highlighted that the fall in government borrowing in the year so far was driven chiefly by higher central government income, up 4% compared to the last fiscal year to date. This has been boosted by National Insurance contributions, up 8.3%, while VAT receipts have increased 2.3% thanks to strong retail spending in 2016.

However, the budget deficit is likely to become increasingly problematic, as GDP growth is set to slow next year, he highlighted.

“All of this points to increased fiscal pressure on the government going forward,” Coy added. “Already, the chancellor has admitted that his predecessor’s promise to eliminate the budget by 2020 will not be met, in an ongoing series of ever-delayed targets. The government now says it hopes to reach a 2% deficit and falling debt by 2020, but with the government continually moving the goalposts, the credibility of these deficit reduction targets is significantly compromised.”

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