Stronger growth is boosting tax receipts and making significant inroads into the UK’s deficit, official figures revealed today.
Public sector borrowing of £11.1 billion in September was lower than expected, and means that underlying deficit for the first half of the financial year so far stands at £56.7 billion, almost 10% below the same period last year.
This puts the Chancellor well on track to undershoot the Office for Budget Responsibility’s £119.8 billion borrowing forecasts for the current financial year, due to be updated in December’s Autumn Statement, reflecting far stronger economic growth so far this year.
The figures showed total current receipts of £281.5 billion for the year to date, compared with £260 billion last year. Capital Economics’ Martin Beck said: “Although the economic recovery has taken its time to come though in the fiscal numbers, September’s figures suggest that the public finances are now beginning to reap the rewards of a stronger economy.”
The UK’s total debt pile grew to £1.21 trillion although the first sale of the taxpayer stake in Lloyds Banking Group made a £600 million pinprick in the mountain.
Bank of England Deputy Governor Charlie Bean added to the cheer today as he said: “There are at last signs that a recovery may be gaining traction.” He added that banks were “well-placed” to provide the credit to support a recovery, although policymakers remain vigilant over the housing market.