George Osborne in growing danger of missing deficit targets, official figures show

The 12-month sum of public borrowing is now  £75.6bn

Ben Chu
Tuesday 24 May 2016 18:29 BST
The Chancellor will have no chance of hitting his targets if Britain votes to leave the EU, analysts said
The Chancellor will have no chance of hitting his targets if Britain votes to leave the EU, analysts said (Reuters)

New official figures yesterday showed that the Government is already drifting off course from its budget deficit reduction targets – even before accounting for any possible post-Brexit slump.

Public borrowing for April, the first month of the 2016-17 financial year, came in at £7.2bn, higher than the £6.5bn expected by economists. The 12-month rolling sum of public borrowing is now tracking at £75.6bn. The Office for Budget Responsibility has forecast the deficit to fall to £55bn by next March.

Borrowing for 2015/16 came in at an upwardly revised £75.6bn - £2.4bn higher than the Office for Budget Responsibility had expected in the March Budget.

Economist suggested that with the economy slowing down the chances of the Chancellor hitting his full-year target are receding.

“Borrowing would need to be £1.8bn a month lower than in 2015-16 in order to achieve the OBR’s full-year forecast of £55.5bn” said Martin Beck of the EY ITEM Club. “This looks to be a tall order, particularly given that the recent weakness in activity appears to be dampening growth in tax receipts”

Analysts added that Brexit would make the target unreachable entirely. “Should the UK vote to leave the EU in June’s referendum, the Chancellor’s fiscal targets and plans would undoubtedly be blown out of the water and there would need to be major adjustments” said Howard Archer of IHS Global Insight.

However, the OBR stressed that revisions by the OBR could ultimately change the picture. “Since 2011-12, the average absolute revision to PSNB [public sector net borrowing] over the 12 months following the initial estimate has been £3.2bn, with revisions more often down than up” it said.

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