George Osborne's public finances headache remains unabated after official figures showed the deficit in August came in at £11.6 billion, up £700 million from the same month last year.
The Office for National Statistics said public borrowing for the tax year to date was £45.4 billion, a six per cent increase from the same stage of 2013-14. Weak income tax receipts, which are running £500 million lower than last year, are primarily responsible for the overshoot.
The annual comparison has been distorted by strong receipts in early 2013-14 as people shifted income to take advantage of the Chancellor’s cut in the top rate of income tax to 45p. But income tax and national insurance receipts were still weak in August, rising by just 1.6 per cent year on year despite record numbers in employment.
Analysts predicted that the Coalition could find it difficult to meet its £115 billion borrowing target for the year.
“August’s public finance figures show that the Coalition is still struggling to bring borrowing down as quickly as planned in the March Budget” said Samuel Tombs of Capital Economics.
Separate figures from the British Bankers’ Association showed that gross mortgage lending in August was £11.1 billion, up 15 per cent year on year.
Mortgage approvals for house purchase were 41,588, a 5% year-on-year increase. But approvals were 15% down on January’s peak.
“The BBA data reinforce the impression that housing market activity is seeing an underlying loss of momentum” said Howard Archer of IHS Global Insight.Reuse content