Government Receipts Down, Spending On Target

The latest public sector finances statistics from the ONS show that in July the public sector had a current budget deficit of £5.1bn and net borrowing of £8bn. At the end of July net debt was £800.8bn or 56.8% of GDP.

The public sector current deficit is £13bn higher than last year when there was a surplus of £7.8bn and the net borrowing is £13.2bn higher than last year when the public sector was lending net of £5.2bn. Latest figures for net debt without financial sector intervention are for June when net debt was £658.1 or 46.6% of GDP. Whereas last year the public sector made a repayment of £14.5bn the net cash requirement for July this year was £0.2bn an increase of £14.7bn. Comparing the net debt shows that last year the net debt was 43.5% of GDP at £627.2bn.

Government receipts were 15.3% lower than the same month last year and government spending was 7.5% higher. Net investment was £2.9bn compared with £2.6bn last year. The Institute of Fiscal Studies said that receipts of Corporation Tax and VAT collapsed to two-thirds of their July 2008 level more than the Treasury predicted in the Budget over the year. Spending is increasing as predicted. They also add that there are good reasons to expect a better performance in revenues over the next few months. The reversal of the VAT cut scheduled for the end of 2009 is one of them.