X

Create an account to continue reading.

Registered readers have access to our blogs and a limited number of magazine articles
For unlimited access to The Spectator, subscribe below

Registered readers have access to our blogs and a limited number of magazine articles

Sign in to continue

Already have an account?

What's my subscriber number?

Subscribe now from £1 a week

Online

Unlimited access to The Spectator including the full archive from 1828

Print

Weekly delivery of the magazine

App

Phone & tablet edition of the magazine

Spectator Club

Subscriber-only offers, events and discounts
 
View subscription offers

Already a subscriber?

or

Subscribe now for unlimited access

ALL FROM JUST £1 A WEEK

View subscription offers

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating an account – Your subscriber number was not recognised though. To link your subscription visit the My Account page

Thank you for creating your account – To update your details click here to manage your account

X

Login

Don't have an account? Sign up
X

Subscription expired

Your subscription has expired. Please go to My Account to renew it or view subscription offers.

X

Forgot Password

Please check your email

If the email address you entered is associated with a web account on our system, you will receive an email from us with instructions for resetting your password.

If you don't receive this email, please check your junk mail folder.

X

It's time to subscribe.

You've read all your free Spectator magazine articles for this month.

Subscribe now for unlimited access – from just £1 a week

You've read all your free Spectator magazine articles for this month.

Subscribe now for unlimited access

Online

Unlimited access to The Spectator including the full archive from 1828

Print

Weekly delivery of the magazine

App

Phone & tablet edition of the magazine

Spectator Club

Subscriber-only offers, events and discounts
X

Sign up

What's my subscriber number? Already have an account?

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating your account – To update your details click here to manage your account

Thank you for creating an account – Your subscriber number was not recognised though. To link your subscription visit the My Account page

Thank you for creating your account – To update your details click here to manage your account

X

Your subscriber number is the 8 digit number printed above your name on the address sheet sent with your magazine each week.

Entering your subscriber number will enable full access to all magazine articles on the site.

If you cannot find your subscriber number then please contact us on customerhelp@subscriptions.co.uk or call 0330 333 0050.

You can create an account in the meantime and link your subscription at a later time. Simply visit the My Account page, enter your subscriber number in the relevant field and click 'submit changes'.

Please note: Previously subscribers used a 'WebID' to log into the website. Your subscriber number is not the same as the WebID. Please ensure you use the subscriber number when you link your subscription.

Coffee House

Borrowing figures are good and bad news for the government

21 September 2012

1:30 PM

21 September 2012

1:30 PM

Today’s public finance statistics are another case of good news/bad news for the government. First, the good news: the ONS revised down its estimate for government borrowing in the last fiscal year (2011/12) from £125 billion to £119.3 billion. That’s £6.7 billion below the OBR’s estimate in March this year, and means that the coalition succeeded in cutting the deficit by 25 per cent in its first two years (29 per cent in real terms).

But the bad news comes when you look at the current fiscal year. The ONS estimates government borrowing for August at £14.41 billion — roughly the same as August 2011 (£14.37 billion). These estimates do tend to end up being revised heavily — by an average of £1.8 billion, and usually downwards — so that figure might improve in the next releases.

[Alt-Text]


But for now it takes total borrowing since April to £31 billion — compared to £48.4 billion in the equivalent five months last year. But that sounds a lot better than it really is, because it includes the effect of the Royal Mail pension transfer, which reduces borrowing this year by £28 billion. So really, the government ran a deficit of £59 billion from April to August 2012, £10.6 billion more than the same months in 2011.

In March, the OBR predicted that the deficit would be £92 billion this year — or £120 billion excluding the Royal Mail pension effect. As it turns out, that’d actually be a slight increase on last year’s £119.3 billion deficit. But it now looks like the government isn’t even going to manage that. In fact, Citi Research predicts it’ll overshoot by roughly £10 billion.

And why has it gone off track? The problem is the lack of economic recovery. Tax receipts were forecast to rise by 3.3 per cent this year, but so far are up by just 0.4 per cent (and actually down 2.3 per cent in real terms). Labour blames spending cuts, naturally, but it’s worth noting that central government current spending is up 3 per cent on last year (0.3 per cent in real terms) — although that’s thanks to the rising benefit bill. Even stripping out benefits and debt interest, core spending is up by 2.4 per cent — in real terms, down just 0.3 per cent.

All of this makes it even more likely that — come the autumn statement on 5 December — the OBR will show Osborne missing his debt target (to have the debt/GDP ratio falling in 2015/16). Mervyn King prepared the ground for this on Channel 4 last night, saying it would be ‘acceptable’ to miss the target if the world economy doesn’t recover.

Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.


Show comments
Close