Government borrowing hopes set to be dashed
Monday 25 June 2012
Chancellor George Osborne's hopes of slashing government borrowing will be dealt a blow tomorrow as the double-dip recession weighs heavily on the public finances.
Public sector net borrowing, excluding financial interventions such as bank bailouts, is expected to be between £16 billion and £16.5 billion, compared with £15 billion in May last year.
While May is only two months into the financial year, the weak figures will trouble the Chancellor who is aiming to trim total borrowing in 2012/2013 to £120 billion, excluding a one-off boost from the transfer of the Royal Mail pension fund into Treasury ownership.
May's borrowing figure will be impacted by a lack of tax receipts, which analysts said was a consequence of the recession and sluggish economic recovery.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "May's public finances are expected to have been pressurised by the hit to tax revenues coming from weakened economic activity."
April's borrowing figures were flattered by a one-off £28 billion lift from the value of assets transferred from the Royal Mail pension plan.
But excluding this one-off 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.
Britain is reportedly on course to borrow nearly £11 billion more than forecast by the independent tax and spending watchdog the Office for Budget Responsibility (OBR).
The OBR has predicted that borrowing will fall from £124.4 billion last year to £92 billion, including the Royal Mail pension impact, in 2012/2013 and £98 billion in 2013/2014.
But independent forecasters expect borrowing of £95.8 billion this year and £104.9 billion in 2013/2014, nearly £11 billion more than the OBR forecast, the Sunday Times said.
The Chancellor is in the process of rolling out a series of tough austerity measures, which include billions of pounds of spending cuts and hundreds of thousands of public sector job losses.
Earlier this month, the Chancellor and Governor of the Bank of England Sir Mervyn King unveiled a multibillion-pound lending scheme to stimulate economic growth - but ministers insisted the move was not a "plan B".
- 1 VMAs 2015: Was Nicki Minaj and Miley Cyrus' awkward acceptance put-down real or staged?
- 3 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 4 Chaos breaks out in courtroom as father attacks killer of three-year-old daughter
VMAs 2015: Was Nicki Minaj and Miley Cyrus' awkward acceptance put-down real or staged?
Bank Holiday Monday opening times: Are Tesco, Asda and other supermarkets open today?
The nine most warmongering countries in the world revealed
Isis releases graphic video showing four Shia 'spies' being burned alive in Anbar, Iraq
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Black holes are a passage to another universe, says Stephen Hawking
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
£35000 - £45000 per annum: Recruitment Genius: You will be working with a 8 st...
£8000 - £12000 per annum: Recruitment Genius: A unique opportunity has arisen ...
Negotiable: Recruitment Genius: An exceptional opportunity has arisen for a pa...
£18000 - £20000 per annum: Recruitment Genius: This provider of designer kitch...