Increases In Budget Deficit And Net Borrowing

Public finances estimates released by the ONS suggest that in May there was a current budget deficit of £17.5bn compared with £10.6 bn last year and net borrowing of £19.9bn up from £12.2 bn last year, a difference of £7.6bn. At the end of May, public sector net debt (PSND) was £774.8bn or 54.7% of GDP. At the same time last year PSND was £629bn or 43.6% of GDP. Public sector net investment was £2.3bn in May. The public sector net cash requirement was £18.8bn, an increase of £9.2bn on last year when it was £9.6bn. The Institute of Fiscal Studies reported that Government borrowing had increased more over the last 2 months than the Budget had predicted and incomes, taxes and NI contributions had fallen faster and are 6.8% lower than last year. It is important, they said, that the Treasury generate as much revenue as they can from every pound of income or spending. VAT receipts are 19% lower and corporation tax is 26.9% lower. Net social spending was 7.9% higher. The Budget predicted an 8.1% increase over 2009-10. Debt interest payments came to £3.3bn in May. Spending on public services was 6.7% higher than last year and the Budget allowed for an increase of 8.4%.