Blow for George Osborne as borrowing rises despite recovery signs

 

There is no sign yet of the improvement in the economy feeding through to the public finances as official figures today showed that Government borrowing in June was up slightly on the same month in 2012.

The Office for National Statistics said that public sector borrowing was £12.4 billion last month, £500 million higher than in June 2012.

“While other indicators are pointing to signs of life in the UK economy, the public finances have yet to see much of a boost from the nascent upturn,” said Martin Beck of Capital Economics.

In another blow for the Government, the deficit for May was revised up by £2.2 billion because the ONS said the Treasury could no longer count on that sum flowing from a tax avoidance deal with Switzerland.

Overall, the figures indicate that the deficit for the present financial year is likely to be broadly the same as last year, suggesting George Osborne is making no headway in bringing down the deficit in 2013-14.

However, the ONS has revised down its estimate for borrowing in 2012-13 by £2.3 billion to £116.4 billion on the back of higher tax receipts than first estimated in the previous financial year. This means that the overall deficit fell on 2011-12 when public borrowing was £118.5 billion.

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