UK public sector borrowing rose greater than anticipated in February, pushed by the price of the federal government’s vitality help schemes, however was nonetheless on monitor to undershoot the brand new official forecast for the fiscal 12 months.
Public sector internet borrowing was £16.7bn final month, the Workplace for Nationwide Statistics mentioned on Tuesday. That was £9.7bn greater than in February 2022 and better than the £11.4bn forecast by economists polled by Reuters.
It was additionally the very best February borrowing since month-to-month data started in 1993, largely due to substantial spending on vitality help initiatives.
Commenting on the figures, chancellor Jeremy Hunt mentioned: “Borrowing continues to be excessive as a result of we’re decided to help households and companies with rising costs and are spending about £1,500 per family to pay slightly below half of individuals’s vitality payments this winter.”
Borrowing rose regardless of the federal government’s receipts rising by £4.9bn in contrast with February final 12 months, reflecting greater tax receipts on labour and raised revenues from the vitality income levy.
Curiosity funds have been additionally decrease than in February final 12 months following the decline within the retail value index that determines the price of index-linked gilts.
Nonetheless, the vitality value assure for households and the vitality invoice reduction scheme for companies boosted spending by £9.6bn in contrast with February final 12 months, elevating general expenditures to £80.8bn.
Higher information got here from the figures for the interval between April 2022 and February 2023, when the general public sector borrowed £132.2bn. With just one month of this fiscal 12 months nonetheless to go, borrowing is heading in the right direction to undershoot the £152.4bn forecast by the Workplace for Price range Accountability for 2022-23, which was revised down final week from the £177bn forecast in November.
The undershooting is extra probably when bearing in mind the £8.6bn short-term distinction between the ONS and OBR’s estimates due to the remedy of scholar loans. Accounting for that, the general public sector may borrow an extra £28.8bn in March 2023, based on the ONS, a a lot bigger sum than the £5.4bn borrowed in March 2022.
Figures for the fiscal 12 months to February confirmed that tax receipts have been 11.1 per cent greater than the identical 11-month interval a 12 months earlier, reflecting the resilience of the economic system and the labour market towards the price of dwelling disaster.
Final week’s official downward revision in public borrowing for the present fiscal 12 months enabled Hunt to broaden free childcare, supply a £9bn tax break for companies and increase pensions for the upper incomes on the Price range.
With borrowing prone to undershoot the full-year forecast, Ruth Gregory, economist on the consultancy Capital Economics, mentioned the chancellor “might need a bit of cash to play with within the fiscal occasion within the autumn”, not least due to the 12 months wherein the fiscal rule requires debt to GDP to be falling is judged rolls on from 2027-28 to 2028-29.
Nonetheless, she added that “the large threat is that the turmoil within the banking sector deepens the financial downturn and the latest enchancment within the public funds is blown away”.