Today’s round of public finance statistics bring mixed news for the government. The headlines have focused on the fact that borrowing last month — at £14.4 billion — was £0.5 billion higher than in June 2011. But considering that the monthly borrowing figures end up being revised by an average of £1.7 billion (usually downwards), we shouldn’t get too fixated on a difference of a few hundred million.
What is perhaps more worrying is the trend in the financial year so far. Superficially, the numbers look pretty good: a total of £14.9 billion in borrowing since April, compared to £38.4 billion in the same three months of last year. But this year’s number is flattered by the £28 billion the government received in April due to the transfer of the Royal Mail pension plan — an accounting change rather than a genuine reduction in borrowing. Strip that out and borrowing so far this financial year is up to £42.9 billion — a £4.5 billion or 11.7 per cent rise on last year.
But in March’s Budget, the OBR forecast that (ignoring the Royal Mail pension effect) borrowing would fall from £126 billion in 2011/12 to £120 billion this year — a drop of £6 billion or 4.8 per cent. The results so far don’t exactly inspire confidence in us hitting that target. If the trend continues over the next few months, we can expect the OBR to raise its borrowing forecast in November. Combine that with the likelihood that it’ll have to downgrade its growth forecasts and we can look forward to a pretty miserable Autumn Statement for George Osborne.
On the plus side of the ledger, meanwhile, the borrowing total for last year has been revised down slightly, after being revised upwards last month. The result is total borrowing for 2011/12 at £125.7 billion, bringing it in just under the £126 billion the OBR estimated in the Budget four months ago — but still higher than the £122 billion it predicted in last year’s Budget.
And still, the debt climbs relentlessly. It now stands at £1.04 trillion, or 66.1 per cent of GDP.
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