Borrowing rise puts Chancellor on the spot
Economy: PSBR figures expose fragile state of finances as Bank Governor tells MPs of his fears
Wednesday 17 July 1996
The message was rubbed home by Eddie George, Governor of the Bank of England, who told MPs on the House of Commons Treasury committee yesterday that the slippage in government borrowing made him "uncomfortable".
"If the Chancellor is comfortable with that it must be because he knows more about it than I do," he said.
Yesterday's borrowing figures also led to a clash between the Prime Minister and Labour leader Tony Blair in the House of Commons on the eve of today's debate on the economy.
Mr Blair asked Mr Major: "Do you recall promising the country at the last election that you would balance the Budget? How do you square that with today's further disastrous borrowing figures?" Mr Major replied that government borrowing would continue to fall.
Borrowing totalled pounds 3.6bn in June, the third month running where the gap between revenues and spending increased. The public sector borrowing requirement (PSBR) was pounds 12bn in April-June, excluding privatisation proceeds of pounds 1.3bn. This compares with pounds 11.3bn in the same months last year.
Tax revenues are now growing in line with the Treasury's new, lower forecast, although subdued due to the income tax cut that took effect in April. However, government spending has run ahead of plans so far this financial year. Spending by departments has grown 3.3 per cent year-on-year, compared with the Treasury target of 1.8 per cent.
The Treasury said June's figure reflected the bunching of interest payments on government debt into June and December, following the introduction of the gilts strip market. This contributed an extra pounds 800m to last month's borrowing total. It had also expected more VAT receipts to be brought forward as a result of changes to the payment-on-account scheme for big payers.
Most commentators said the disappointing PSBR figures would not necessarily derail tax cuts.
- 1 California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
- 3 Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
- 5 We have six months to save the world, says leading economist
California man brutally beat 82-year-old Sikh grandfather he mistook for 'one of those people'
Sepp Blatter resigns: FBI are investigating outgoing Fifa president, claims report
Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
Gay teenager 'forced to have sex with his own mother' to 'cure' his homosexuality, campaigners in India say
Charles Kennedy 'had better judgement drunk than many sober politicians' says Ian Hislop
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...