LONDON: The UK government borrowed less than expected last month because of a rise in the tax take but is still likely to overshoot the £55.5bn borrowing total for the 2016/17 financial year that was forecast in March.
The public sector borrowed £4.8bn in October, according to the latest figures from the Office for National Statistics, £1.6bn less than in the same month a year ago and below economists’ expectations of £6bn.
The March forecasts from the Office for Budget Responsibility fiscal watchdog predicted that borrowing would be £16.7bn lower this year than last. But over the first seven months of the year it has been only £5.6bn lower. Tax receipts have been weaker than expected this year despite the economy having grown more than the OBR forecast in March.
“While Chancellor Hammond would have welcomed this morning’s improvement in the public finances, it is unlikely to be a sign of things to come in tomorrow’s Autumn Statement,” said Scott Bowman, of Capital Economics. Although “the pace of improvement in the public finances accelerated … borrowing has still not fallen to the extent the OBR expected in its March forecast”, he added.
Tax receipts are one of the few official economic measures that are based on hard data, rather than surveys, and provide one of the most accurate immediate indicators of the economy’s health.
In October, total government receipts grew 6.8 per cent year on year, while they have grown 4.4 per cent over the whole of the first seven months of the financial year. The March forecast was that revenues would grow 5.9 per cent over the year.
