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Deficit latest: Still £5 billion higher than last year

21 February 2013

12:51 PM

21 February 2013

12:51 PM

Today’s borrowing figures show that the government had a surplus of £11.4 billion in January. But before we get too excited, a bit of context is in order. There’s (almost) always a surplus in January, thanks mainly to self assessment and capital gains tax receipts. And today’s figure includes £3.8 billion transferred from the Bank of England’s Asset Purchase Facility to the Treasury. Stripping that out gives a £7.6 billion surplus — an improvement on the £6.4 billion surplus in January 2012, but not enough to make up for higher borrowing in the rest of the year. Total borrowing in the ten months of the year so far is £97.6 billion (excluding the Royal Mail pension and APF transfers) — £5.3 billion higher than in the same period last year.

So can George Osborne still make good on his claim that ‘the deficit is coming down this year, and every year of this Parliament’? His job was actually made slightly harder today as the 2011-12 deficit was revised down by £0.7 billion (‘almost entirely’ due to the reclassification of Bradford & Bingley and Northern Rock from financial corporations to part of central government). Based on the current figures, he would have to borrow less than £23.4 billion in February and March — compared to the £28.6 billion he borrowed in those months last year. We know he can expect £2.3 billion to come in from the 4G auction, but that still leaves £3 billion to find in just two months.

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That might not be an impossible task — and it’s worth remembering that the monthly figures end up being revised up or down by an average of £1.7 billion — but it’s certainly a tough one. Osborne has so far been helped by lower debt interest payments than expected, but that hasn’t made up for lower tax receipts and higher core and benefit spending than predicted:

And through it all, the national debt continues to grow. The ONS actually revised up its figure for net debt by more than £70 billion (again, ‘almost entirely’ due to the reclassification of Bradford & Bingley and Northern Rock), and it now stands at £1.16 trillion, or 73.8 per cent of GDP.

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  • HooksLaw
    • Makroon

      So that’s how the French economy is still defying gravity !
      (that and all those tax-free, over-paid footballers).

  • HooksLaw

    So before we get too excited the surplus is higher than last year. Thank you.

    BTW
    This surplus is not personally manufactured by the Chancellor and a team of government ministers from some ‘surplus mine’. The level or not of any surplus is not a product of any low or higher productive ‘mining’ by the govt. As you seem to endlessly contend.

    The government can control its own discretionary spending and it is doing. Indeed it is controlling its own non discretionary spending as well by cutting and limiting welfare.

    The govt can influence interest rates which are low and bank lending for which it has a number of guarantee schemes.
    The govt can entourage growth –

    by rebalancing the economy, it is doing
    by encouraging infrastructure spending, it is doing
    with low interest rates, we have them

    The govt can ensure that a giant recession does not hit us by better regulating speculation – which it has done.

    But what the govt cannot do it what the schoolboys who run the spectator want – it and the spectator cannot have its cake and eat it.

    • HooksLaw

      PS
      Revenue is not something you ‘find’ as in under a stone. Revenue is generated by a sound economy.
      This sound economy is something we do not have jet.
      We were bequeathed an anything but sound economy by labour.
      An economy where manufacturing had declined and banking sharp practice increased.
      With the banking, sharp practice and al,l gone – where does the money come from overnight?
      And with Euroland in recession – including Germany – where do manufacturing revenues come from?

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        And with Euroland in recession – including Germany – where do
        manufacturing revenues come from?” IMPORT SUBSITUTION

        • HooksLaw

          So you believe in the central command economy? The govt directing resources away from exports and restricting imports and free trade?

          You think that is the way to build efficient industries?
          Did it work in Latin America.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            NO PILLOCK. Import Substitution is where Manufacturers make the goods we import so the Trade Deficit doesn’t get bigger. Yes we can stop exporting iPhones, TVs, Shoes, Kitchen wear, Clothing, and make our own….but we don’t make it. We even import cups and saucers, pans, coat hangers, cotton thread, Wellington boots, socks

        • Daniel Maris

          I agree. We should apply our full range of intelligence, creativity and organisational ability to import substitution.

          In the past there were some very hard limits to what a country could achieve but this is no longer the case.

          We should also look to expand our area significantly as the Netherlands has done.

    • dalai guevara

      ‘The government can encourage growth’
      You have missed out the minor issue which is…devaluation. Why? Other economies are not that fussed about continued growth – yes, it’s nice to have it, but what matters far more than growth measured in a fial currency is the trade balance.

      • HooksLaw

        I am not convinced that our growth figures are being properly recorded in any event.

        But as for devaluation, the inability for Greece to devalue has caused far more pain than necessary. Devaluation spreads the pain of economic recession and encourages exports. It is not a panacea, and its not advisable to use it as a crutch or prop for an economy, ultimately a nation needs a strong currency because devaluation in the end impoverishes everybody.

        • dalai guevara

          Yes, the triple dip will be avoided (on paper) as we are just in the process of devaluing a further 10% towards all major currencies (not just the dollar).

        • CharlietheChump

          Trouble is everybody is playing the devaluation game

          • HooksLaw

            Devaluation is a safety valve – I am not saying it is good long term to rely on it.
            If you look at weak countries like greece they have always relied on it.

            • Makroon

              The current devaluation is not a safety valve.

              It is the direct result of the injudicious talking down of the currency by a lame-duck and vindictive Bank of England governor.

              Never mind, more easy money for the likes of Soros and Jim Rogers.

              Last year, there was a scandalous spending blow-out in the last two months of the financial year. This is when we find out whether Osborne has learnt anything and really does have a control on spending, or whether, (as Jones thinks), it will be a repeat of last year.

              (Although last year’s deficit was quite heftily revised downwards).

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              If you look at weak countries like Britain they have always relied on it.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          It depends on Export Elasticity and Import Elasticity. In the case of the UK Imports are Inelastic and contrary to expectations so are Exports meaning Import Prices squeeze Incomes and Exports do not rise as a result of Devaluation

          • Makroon

            Academic economics.
            Fact is, devaluations will not stimulate exports if export markets are in recession/growing very slowly.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              No. It is reality. What does Britain export physically……list the items and then whether global demand is fast-rising or stagnant…then you can see the effect of Devaluation. Numeracy is Academic which is why it is rarely found in British journalism

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      “The govt can influence interest rates which are low and bank lending for
      which it has a number of guarantee schemes.” That is fatuous even for you. In Economics we use time frames and the Government is impotent on matters such as Forex, Bond Yield and Bank Lending. It has used Magic Money to manipulate Gilt Markets and now faces Currency Crisis. It has a Banking and Pension Fund System stuffed to the gills with Gilts rated AAA. Once they lose Triple-A those Banks and Pension Funds can no longer use them as collateral leaving Insolvency as a prospect. As for Bank Lending….they are rather full of Non-Performing Commercial Property Loans and BTL Mortgages and may not want to lend on property making rollover of existing loans hard. Plus which the Banks and LBO deals have a huge refinancing need in 2014-2016. You really should stop spouting drivel

      • HooksLaw

        I think your stream of conciousness is the drivel.

        Interest rates are low.

        The govt is doing what it can within its limits to encourage bank lending. Bank lending against a background of broken banks and stricter liquidity levels that the banks are being required to live within.

        We have had a banking system run by what appear to be barrow boys. I hope its different now.
        A huge pall of debt hangs over the nation and indeed over the developed world. Not Osborne’s fault.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          INterest Rates are low because Bond Prices are HIGH. Noone can borrow at these low interest rates apart from Banks, Hedge FUnds and Government

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            When Bond Prices fall the Credit Squeeze will tighten as Bank Capital collapses

  • Jebediah

    Jones, we can’t credibly read you when you start out with a conclusion in mind (your article history clearly shows your biases): “Osborne is crap” you therefore do everything you can to downplay good figures and overstate bad.
    I’m no big fan of Osborne but you need to be more objective in your journalism.

    • Russell

      When combined with articles from Hardman, it would seem the speccie is either genuinely shifting significantly left towards total Miliband/Balls support or is convinced that labour will win in 2015 and wants to be seen to be onboard the (winning) ‘team’ to garner favours from Labour in the future.
      I’d love to see Labour decimated at the next election as well as the Tories and LibDems with a massive swing towards UKIP, with the Tories ‘winning’, just.
      Such a result might encourage the Tories to actually set about reducing the enormous cost of the public sector and government spending and start reducing taxes.

      • HooksLaw

        No, the Spectator is full of juvenile wooly thinking fruit loops. Paid by the Barclay bros of course.
        Indeed their fruity loopiness tends more towards your brand rather than labour it seems to me.

        • Russell

          My ‘brand’ as you put it, is a voter who has voted conservative all his life, but cannot stand to see a conservative government maintaining an unaffordable public sector and an unaffordable membership of the EU (despite the majority of the electorate wanting both a referendum and our exit from the EU).
          I will vote for UKIP like millions of others from Tory and Labour voting backgrounds and will not be deterred or influenced by threats that doing so will let in Labour, I now couldn’t care less if labour get in, I will demonstrate my objection to the EU membership cost and the damage it is doing to the UK.

          • Archimedes

            You’re like a little girl, jumping up and down, screaming that everyone should pay attention to the way you’ve changed your mind. “Don’t they realise that this. is. significant!?!?”. Vote UKIP. No one cares. Get over it.

          • HooksLaw

            The government are cutting hundreds of thousands of jobs from the public sector. This despite of course it being a coalition.

            Even if not in the EU we would still be paying money in to the EU regional fund as part of access to the single market and signing up to single market regulations.

            The notion that EU membership is more damaging to the UK than a EUfriendly labour government run by Miliband and Balls is risible. Not least when you consider that being out would still mean a trade agreement as outlined above.
            And of course the Tories are committed to a referendum.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              I think you will find Public Sector jobs are being reclassified as with Higher Education turning into “Private Sector” jobs

              • HooksLaw

                I think you will find you are talking rubbish, self deluding garbage.

                • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                  Further education corporations and sixth-form college corporations in England were classified to the public sector up to March 2012 and to the private sector from June 2012.

            • Russell

              There are still after 3 years hundreds of thousands of public sector ‘jobs’ and quango ‘jobs’ and council jobsworthys that need to be cut!
              We would not be the 2nd highest net contributor (£10billion net per year)to the EU slush fund if we were no longer a member of the EU.

              Trade agreements could easily be negotiated in our favour bearing in mind the £billions of imports we currently pay to the EU countries.
              Do you honestly think Germany would like to see tariffs imposed on BMW;s, Mercedes etc? I think not.

              As for Camerons so called promise of a referendum, why is not written into a Bill ensuring the British people get one?
              Because he can weasel out of one if he managed to get back into another coalition government in 2015!

              • HooksLaw

                The IFS I think are saying that 1.2 million public jobs will go. As it happens we still need teachers and nurses and doctors and street cleaners so unfortunately for you there will be some public sector left.

                ‘easily negotiated in our favour’ – more self deluded rubbish. The only country in Europe with such a arrangement? yes really. You show you have no idea about ‘trade agreements’.

                You are clueless about what you are talking about and would put the entire economy of the country in danger on a whim?
                The result of us being out of the EU would be with us being like Norway, still in the single market and signing up to EU rules and paying to the EU.
                Fine but in no way significantly different to our everyday lives.

                ie no real difference and with no influence and still with the EU on our doorstep making single market rules for us to sign up to..

                You do not want to face reality because it impinges on your prejudice. Under the tories we will renegotiate out terms as is inevitable when the EU produce a new Euro fiscal treaty and we will have a referendum — and the only chance of another coalition is if people vote UKIP.
                I grow tired of people thinking the sun shines out of Farage’s backside and is the only saint amongst an army of sinners. His central theseis is a fraud.

          • Robert_Eve

            Good post.

      • telemachus

        I wish we did see more support for the charismatic one but in truth I do not see it
        On the other hand a little objective reporting is welcome after a diet of the intelligent dailies which by and large salivate over Osborne

        • Archimedes

          Fat people are always more charismatic – I think it’s a compensation thing. At a mobility level, of course, he does have the advantage of being able to roll, rather than walk, through the corridors of power. The problem is, when he rolls into a hole, it’s just that much more difficult for him to extract himself. Osborne, on the other hand, sticking to the much popularised leg-operated-movement-mechanism, is at an advantage there.

          • telemachus

            Ask yourself which one makes you smile and which leaves you with a bad taste

        • Nicholas chuzzlewit

          Elvis is not going to sort out the UK deficit. How many more times!!

          • telemachus

            I guess in years to come we will see the charismatic one on a par with Elvis

        • CharlietheChump

          “Charismatic”? Who are you talking about Dave, Ed or Stailn?

          • telemachus

            The charismatic superstar who would be building for growth if allowed

        • DWWolds

          But he was in a government running a £160bn deficit.

          • telemachus

            To keep us going after the Lehman crisis
            We would be growing and paying back if Osborne had not choked it off

            • HooksLaw

              But the deficit is still there – its not been choked off – it would be difficult to do that anyway without rioting in the streets – its been set to be cut late in the parliament.
              We would be growing? Like Germany where 4Q showed -0.5% contraction?
              The govt have done nothing to choke off anything.

              • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                No VAT rising from 15% to 20% in a year is a snip

              • telemachus

                So why did they axe all capital spending to trigger unemployment and initiate the triple dip?

      • CharlietheChump

        But that just won’t happen because so many of our compatriots who have the vote are addicted to sucking on the socialist entitlements teat.
        The worst UKIP will achieve is to leak Conservative votes which might force a useful realignment to a more libertarian position.
        With the ircurrent stance trying to be centre-ground – actually meaning left wing essentially – I can’t support the Cameron/Osborne Conservatives either.

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