Magazine article Public Finance

Numbers Game

Magazine article Public Finance

Numbers Game

Article excerpt

George Osborne's hopes of getting the public finances under control took another blow with the publication of the borrowing figures for July.

Net borrowing for the month stood at £557m compared with a repayment of £2.8bn in July 2011. The chancellor would normally expect strong tax income in July, but total receipts fell by £400m or 0.8% compared with a year ago, while government spending increased by £2.4bn or 5.1%.

According to the Ernst & Young Item Club, the jump in spending and the decline in revenues is a 'genuine cause for concern'. It predicted the Office for Budget Responsibility would have to make 'some pretty hefty upward revisions' to its borrowing estimate for 2012/13.

So far this financial year, public sector net borrowing - excluding banking interventions and a one-off transfer from the Royal Mail pension scheme - stands at £44.9bn This compares with £35.6bn for the same period a year ago.

In March, the OBR predicted borrowing of £126bn for 2011/12 - it was actually confirmed this month as £125bn - and suggested the figure for 2012/13 would be £120bn

The Item Club believes that the government is on course for a 'massive overshoof of the 2012/13 forecast and pinned the blame on the overall weakness of the UK economy. …

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