New blow for George Osborne as UK public borrowing balloons to £13bn in May
Government borrowing is nearly 9% higher than a year ago despite growth spurge
Friday 20 June 2014
The much-heralded economic recovery is yet to feed into improving public finances as borrowing remained worryingly high in May, official figures showed.
Public borrowing of £13.3 billion over the month was £4.6 billion higher than a year earlier. But stripping out a host of one-offs which flattered last year’s figures, the monthly deficit barely moved despite much stronger growth for the economy than a year ago, the Office for National Statistics said.
Adjusting for the transfer of the Royal Mail pension fund assets to the public sector, dividends from the Bank of England’s gilts bought under its money-printing programme, and a Swiss tax settlement which swelled the Treasury’s coffers by £900 million last year, net borrowing was just £200 million lower than in May 2013 at £12.4 billion.
Corporation tax takings were up and stamp duty surged to £1.2 billion on the back of rising house prices, but income tax receipts were disappointing due to the cut in the top rate of a tax and the surge in self-employment behind the UK’s jobs recovery.
IHS Global Insight’s Howard Archer said: “The overall performance for April and May has not been the start to the fiscal year that George Osborne would have been looking for.
“The Chancellor will be fervently hoping that the public finances do improve over the coming months as it would not only reflect well on the government’s stewardship of the economy but also facilitate the offering of a few sweeteners to the electorate just before the May 2015 general election — either in this year’s Autumn Statement or in next March’s Budget.”
The UK’s net debt stood at £1.28 trillion at the end of May, equivalent to 76.1 per cent of gross domestic product.
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