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.

Growth In Retail Sales

The value of retail sales went up 2.5% and the volume by 2.9% in June 2009 on June 2008 according to the Office for National Statistics latest bulletin on retail sales. The value went up 1.4% and volume 1.3% over the quarter on the same quarter last year. The difference in value between May and June was 0.6% and in volume 1.2%. On the previous quarter the change was 0.8% in value and 0.7% in volume.

Monthly sales values for food stores was up by 6.5% and volume by 2.6% and non-food stores values were down by 1.6% but volumes up by 2.4%. The value of sales in household goods stores decreased 7.2%, others by 4.1%. The non-store retailing sector increased by 7.4% on last year. The largest increase in non-food stores was in textile, clothing and footwear stores at 11.3%. The largest decrease was in household goods stores at 5% driven by furniture and hardware stores. Non-store retailing and repair increased by 10.1% on last year.

The prices of retail sales, an implied price deflator, were 0.2% lower than June 2008. Internet retail sales average weekly value was £179.8m or 3.3% of the total. The value data report the value of sales at the till. The volume data are constructed to remove the effect of price changes. The CPI is the main source of data on price changes.