Borrowing still a 'problem' for George Osborne
Thursday 18 October 2012
The underlying health of the public finances will remain problematic for the Chancellor despite an expected improvement in Government borrowing, experts warned today.
Public sector net borrowing, excluding financial interventions such as bank bailouts, is expected to drop tomorrow to £13.9 billion for September, compared to £14.4 billion in the same month last year.
A slight improvement in overall economic activity in September will have helped tax receipts despite mounting pressure on the public purse as Government spending, driven up by higher benefits, still outweighs tax receipts.
Howard Archer, chief UK and European economist at IHS Global Insight, said the Chancellor faces a "problematic" autumn statement in December as borrowing looks set to overshoot the £120 billion target for 2012/2013 by at least £15 billion.
He said: "The Chancellor will be desperately hoping that the UK can start showing sustained growth which would at least help the public finances improve over the coming months and help combat calls for easing back on the austerity."
The Chancellor is now widely expected to announce in his autumn statement that the Government will be unable to start bringing down debt as a percentage of GDP in 2015/16.
The chances of this happening were heightened last month after Bank of England Governor Sir Mervyn King effectively endorsed such a move - on condition the global economy was growing slowly.
If Mr Osborne sticks to the debt target, he will be faced with the unpopular decision of announcing potentially large tax rises and further spending cuts.
Government borrowing remained unchanged in August at £14.4 billion as total tax receipts increased 1.8% to £41.4 billion and total expenditure rose by 2.5% to £52.5 billion.
In the first five months of the financial year, the public finances were worse year-on-year due to economic contraction hitting tax revenues.
Stripping out the one-off impact of the transfer of £28 billion of assets from the Royal Mail's pension funds, public borrowing was £59 billion, up from £48.4 billion in the corresponding period in 2011/12.
- 1 East 17 bandmember Brian Harvey in 'very desperate situation’
- 2 Is this bridge haunted by the ghost of nu rave?
- 3 Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
East 17 bandmember Brian Harvey in 'very desperate situation’
Is this bridge haunted by the ghost of nu rave?
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Saudi Arabia says it won't rule out building nuclear weapons
Germanwings plane crash: Andreas Lubitz 'had eyesight problems' and woke from nightmares 'screaming we’re going down'
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
Revealed: Putin's army of pro-Kremlin bloggers
The West has it totally wrong on Lee Kuan Yew
£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...
Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...
£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...
£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...