Public Sector Borrowing Up In November

The public sector finances showed a current budget deficit of £16.2bn in November 2009 compared to a deficit of £13.2bn for November last year, an increase of £3bn. Net borrowing reached £20.3bn in November this year, £4.9bn higher than the £15.5bn in 2008. Net debt was £844.5bn which equals 60.2% of GDP compared to £706.2bn which was 49.6% of GDP last year. Public sector net cash requirement was £14.7bn, £4bn more than the £10.6bn net cash requirement of last year.

Public sector net investment totalled £4.1bn which when added to the current budget deficit of £16.2bn gives the total public sector net borrowing figure of £20.3bn. The sectoral breakdown of borrowing shows that central government accounted for £20.6bn, local government £0.8bn and the total was offset by £1.1bn from revisions for public corporations.

Current receipts in Novemeber amounted to £33.8bn, 3% lower than the same month last year, and current expenditure to £50.3bn, 6.4% higher than last year, of which £16.2bn was social benefits and £3.5bn interest. Income and wealth taxes accounted for £10.3bn of the current receipts but the biggest contributor was taxes on production of £13.7bn.

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.

Debt Highest Proportion Of GDP Yet

The public sector current deficit was £9.9bn in June 2009 according to the Public Sector Finances bulletin from the Office for National Statistics and HM Treasury. Public sector net borrowing was £13bn. The net cash requirement was £19bn and the net debt £798.8bn or 56.6% GDP. The public sector net debt for June was £657.5bn. In the year 2009/10 April to June there was a current budget deficit of £34.1bn and net borrowing of £41.2bn. The public sector net cash requirement was £42.8bn. The Budget 2009 predicted public sector current budget of £132bn, public sector net borrowing of £175bn and public sector debt excluding financial sector interventions of 55.4% GDP at end March 2010. Financial sector interventions have had some effect on financial data. It has reduced the Central Government Net Cash Requirement (CGNCR) by about £2.5bn, mainly due to the disposal of company securities, but was neutral for the public sector as a whole.

The Institute for Fiscal Studies said the public finance figures may give some encouragement to the Government as tax receipts fell by only 5.7% in June relative to June last year. It is a smaller rate of decline than the 7.4% predicted for the whole of 2009/10. The figures may at first suggest slower spending growth but in fact without the financial sector intervention it can be seen that spending continues to grow. Fears about the use of public sector investment not being able to stimulate the economy quickly enough have not so far been borne out as investment has been £2.6bn higher than the same period last year.

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%.