Current Budget Deficit £11.5bn

Recent figures from the ONS and HM Treasury show that the current budget was in deficit by £11.5bn in December 2009, £0.4bn more than in December 2008. Government net borrowing, the total of central and local government and public corporations together, was £15.7bn, £1.9bn more than in December 2008, when it was £13.8bn. The public sector net cash requirement, again a total of central and local government and public corporations, was £23.6bn, £2bn more than the previous year and net debt was £870bn, equivalent to 61.7% of GDP compared to 60.1% for November and 51.7% for December 2008.

If the Goverment financial interventions are excluded public secor net borrowing was £50.3bn and net debt was £740.6bn from £596.9bn in 2008.

Looking at the public sector finances in terms of the current financial year which helps to smooth out any volatility in monthly data which can often mislead, the current budget deficit is £93.4bn, the public sector net borrowing was £119.9bn, £56.3bn more than the same period of 2008-9. Net borrowing excluding Goverment financial interventions was £127.9bn, £57.8bn higher than the same period 2008-9. Public sector net cash requirement was £120.5bn, compared to a cash requirement of £51.4bn in 2008-9. Public sector net investment was £4.2bn compared with £2.7bn lastb year.

During December the Government also subscribed £5.7bn to Lloyds Banking Group rights issue and £25.5bn to the Royal Bank of Scotland group, £6.4bn of which will be treated as a capital grant. These will increase the central government net cash requirement but will reduce public corporations' net cash requirement correspondingly.

The Institute of Fiscal Studies said that the Government will not have to borrow as much as expected in the Pre-Budget Report but also that next month's figures will include self-assessment returns for 2008-9, Corporation Taxes and NICs on bonuses for this month.

Govrnment Can Still Hit Fiscal Targets

Provisional estimates of public finances released last week by the ONS show that in August the public sector current budget had a deficit of £12.8bn and net borrowing of £16.1bn. At the end of August the public sector net debt was £804.8bn or 57.5% of GDP, compared to 52.7% in 2008-9. The public sector net cash requirement was £10.4bn. The public sector current budget in August 2008 was 7.7bn and net borrowing was 9.9bn.

In the financial year so far in 2009-10, there was a public sector current budget deficit of £52.9bn and public sector net borrowing of £65.3bn. The public sector net cash requirement was £57.1bn.

The public sector net debt, excluding the financial sector intervention, according to the latest figures which are up to June 2009 show public sector net debt was £658.2bn or 46.9% of GDP compared with 43.2% in 2008-9.

Total central government receipts in August 2009 were 34.1bn, down from 37.5bn in 2008 and total expenditure was 45.6bn, down from 44.2bn at the same time last year. The Institute of Fiscal Studies commented that receipts were 9.2% lower in August this year and spending 3% higher. The 2009 Budget suggested 7.6% and 7.4% respectively. Public sector net investment was £3.3bn compared to £2.1bn last August. Between April and August public sector net investment amounts to £12.4bn, 37% higher than the same period last year. The 2009 Budget predicted investment of £43.8bn, 16% above last year.

The Institute of Fiscal Studies also commented that Government borrowing was 2.5 times as large as last year rather than twice as large as predicted so borrowing will have to slow to hit their target which is still possible with the new increases in revenue that are due this month and in the New 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%.