The chancellor’s plan to cut the deficit this year still looks out of reach as he prepares to deliver the autumn statment next month, despite a surprise improvement in the public finances in October.
In the final update on the state of the nation’s finances before the statement on 3 December, borrowing of £7.7bn last month was £200m less than the same month last year, and £200m below City expectations.
Improvement in October, typically a strong month for corporation tax receipts, did little to alter the broader picture that George Osborne is behind on his plan to reduce the deficit this year.
Over the fiscal year so far, from April to October, the government has borrowed £64.1bn, £3.7bn more than at the same point last year according to the Office for National Statistics data.
Rob Wood, chief UK economist at Berenberg, said the chancellor was still off course on his deficit plans, with a £15bn black hole to fill in the remaining five months of the year. That would require a 40% reduction in borrowing over the remainder of the fiscal year, he said.
“The implausibility of that means Osborne faces a testing time in a week and a half, when he updates the country on how the austerity drive is going in his autumn statement.”
The public purse has been hit by weaker than expected tax revenues, partly because muted wage rises have limited income tax receipts.
A rise in the income tax personal allowance to £10,000 has also limited receipts, by taking more people out of tax at a time when a lot of the recent rise in employment has been at the low end of the pay scale. However, a spokesman for the Treasury said the government’s economic plan was working, with the economy growing faster than the UK’s G7 peers.
He said: “While today’s public finance figures show borrowing is down this month compared to last year, the impact of the great recession is still being felt in our economy and the public finances.
“At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy. That’s why we will continue working through the plan that is building a resilient British economy.”
The government received £54.5bn in tax receipts in October, up £5.8bn or 12% compared with last October. Government spending increased by £1.6bn, or 2.9%, to £57.3bn.
Commenting on the latest figures, Chris Leslie, shadow chief secretary to the Treasury, said: “These figures are yet another damaging setback for George Osborne. George Osborne’s promise to balance the books by next year lies in tatters. Stagnating wages and too many people in low-paid jobs are leading to more borrowing.”
theguardian.com
In the final update on the state of the nation’s finances before the statement on 3 December, borrowing of £7.7bn last month was £200m less than the same month last year, and £200m below City expectations.
Improvement in October, typically a strong month for corporation tax receipts, did little to alter the broader picture that George Osborne is behind on his plan to reduce the deficit this year.
Over the fiscal year so far, from April to October, the government has borrowed £64.1bn, £3.7bn more than at the same point last year according to the Office for National Statistics data.
Rob Wood, chief UK economist at Berenberg, said the chancellor was still off course on his deficit plans, with a £15bn black hole to fill in the remaining five months of the year. That would require a 40% reduction in borrowing over the remainder of the fiscal year, he said.
“The implausibility of that means Osborne faces a testing time in a week and a half, when he updates the country on how the austerity drive is going in his autumn statement.”
The public purse has been hit by weaker than expected tax revenues, partly because muted wage rises have limited income tax receipts.
A rise in the income tax personal allowance to £10,000 has also limited receipts, by taking more people out of tax at a time when a lot of the recent rise in employment has been at the low end of the pay scale. However, a spokesman for the Treasury said the government’s economic plan was working, with the economy growing faster than the UK’s G7 peers.
He said: “While today’s public finance figures show borrowing is down this month compared to last year, the impact of the great recession is still being felt in our economy and the public finances.
“At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy. That’s why we will continue working through the plan that is building a resilient British economy.”
The government received £54.5bn in tax receipts in October, up £5.8bn or 12% compared with last October. Government spending increased by £1.6bn, or 2.9%, to £57.3bn.
Commenting on the latest figures, Chris Leslie, shadow chief secretary to the Treasury, said: “These figures are yet another damaging setback for George Osborne. George Osborne’s promise to balance the books by next year lies in tatters. Stagnating wages and too many people in low-paid jobs are leading to more borrowing.”
theguardian.com
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