Pensions move brings Treasury boost
Tuesday 22 May 2012
The transfer of Royal Mail pensions into the public sector gave
the Government's finances a one-off boost today, offsetting a
larger-than-expected surge in borrowing last month.
The Treasury achieved a £16.5 billion public sector net surplus in April - that is revenues were higher than spending - after a £28 billion lift from the value of assets transferred from the Royal Mail pension plan. This compares to £9.1 billion borrowing in April last year.
But excluding the one-off Royal Mail impact, the Government actually recorded public sector net borrowing, excluding financial interventions such as bank bailouts, of £11.5 billion - £3 billion higher than City forecasts.
Elsewhere, Chancellor George Osborne's deficit-busting plans were helped as total borrowing for 2011/2012 was revised down by £1.6 billion to £124.4 billion, meaning a reduction of more than £12 billion over the year.
A Treasury spokesman said: "Despite the challenges the recovery is facing from the eurozone and elsewhere, the Government is making good progress in dealing with the deficit."
He added that the £28 billion one-off boost to the public finances from the Royal Mail pension assets would be used to pay down debt rather than fund extra spending.
Tax and spending watchdog the Office for Budget Responsibility has forecast total public borrowing for 2012/2013 of £120 billion, or £92 billion when the Royal Mail pension plan is taken into account.
However, as April is the first month of the fiscal year, analysts said it was too early to comment on progress made towards that target.
But Howard Archer, chief UK and European economist at IHS Global Insight, said the underlying picture in April "appears weaker".
Tax receipts on production, income and wealth were 0.9% lower as weakened economic growth started to take its toll, while spending still rose 3.8% year on year.
Mr Archer added: "The Chancellor needs the economy to return to growth sooner rather than later if he is to achieve his fiscal targets for 2012/13 and obviously much will depend on events in Greece."
Net debt, excluding financial interventions, was still over the £1 trillion mark, equal to 64.8% of GDP.
Business leaders continued to back the Chancellor's tough austerity measures, which include billions of pounds of spending cuts and hundreds of thousands of public sector job losses.
David Kern, chief economist at the British Chambers of Commerce (BCC), said: "We must stick to Plan A, but it is just as important to reallocate priorities within the current spending envelope so that businesses can drive growth.
"Cutting regulation, supporting Britain's exporters and increasing infrastructure spending are possible within the government's current plan, all of which are crucial to sustaining the recovery."
- 1 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 2 Perez Hilton apologises for Jennifer Lawrence naked photo leak
- 3 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 4 Mexican woman becomes world’s 'oldest person' at 127
- 5 Jennifer Lawrence 'naked sex video' will be leaked threatens 4Chan celebrity photo hacker
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Israel to appropriate 400 hectares in West Bank for ‘state use’
Kate Upton nude pictures leak: Model's representatives 'looking into' authenticity of naked images
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ashya King: 'Cruel NHS has not given us the treatment we need', says father of five-year-old with brain tumour who fled to Spain
iJobs Money & Business
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...