Gov't borrowing surpasses expectations in June
Questions raised over government's ability to meet targets this year
By CFOWorld staff | CFO UK | Published 12:00, 20 July 12
Public borrowing rose last month to £14.45 billion surpassing expectations and casting doubts over the government’s target to meet its deficit reduction for this year.
The economy in recession continued to weigh on public finances, raising doubts over the Conservative-led coalition’s committment to eliminating the structural budget deficit during this parliament
This week prime minister David Cameron said austerity may have to last until 2020.
The Office for National Statistics said public sector net borrowing, excluding financial sector interventions, rose last month to £14.447 billion from £13.919 billion in June 2011.
Borrowing for the fiscal year as a whole is less than half of what it was last year, but this is almost wholly due to the figures being flattered by the transfer of the Royal Mail's pension assets to the government.
Stripping out this effect, the ONS said public sector net borrowing for the fiscal year to date had risen by 11.7 percent, compared with a decline of 4.6 percent forecast by the Office for Budget Responsibility for the fiscal year as a whole.
The Treasury said the public finances might not end up as far from the OBR forecast for 2011/12 as current year-to-date figures suggested, and the ONS noted that income tax receipts, for example, tend to come towards the end of the year.
"It is too early in the financial year to draw conclusions about the year as a whole. This is volatile data and is prone to revision: borrowing for last year has been revised again and is now estimated to be below the OBR's forecast," the Treasury said.
Much of the current overshoot in borrowing was due to a smaller surplus in local government finances than last year, because of deferred or reduced central government grants, the ONS added.
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