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.
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.