PSBR set to meet forecasts

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The British Government was in the red by £5.2bn last month. The shortfall dashed hopes that the public sector borrowing requirement (PSBR) for this financial year would be less than the Treasury's forecast of £34.5bn forecast, writes Diane Coyle.

Revenues fell and expenditures rose in the month. Total tax revenues fell from £25.1bn in January to £16.58bn in February reflecting seasonal factors.

Year-on-year, however, revenues grew 8.4 per cent, slower than Treasury forecasts. Economists said this might be due to the modest rise in personal incomes.

Central government spending last month was 3.1 per cent higher than a year earlier, in line with Treasury forecasts. The usual seasonal pattern is for sharp increases in departmental spending towards the end of the financial year, to make sure budgets are used up.

The cumulative total for the PSBR is still well below last year's level. At £25.2bn, it is more than a quarter lower than in 1993/94, but the March borrowing requirement is difficult to forecast. The Treasury said the PSBR was on track to meet the £34.5bn target for the full financial year.

Most City economists agree that it will be in the range of £32-£36bn.