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| Labour blasts 'failing' government after UK deficit jumps in June – business live | Labour blasts 'failing' government after UK deficit jumps in June – business live |
| (35 minutes later) | |
| 11.45am BST | |
| 11:45 | |
| The big picture from today’s public finances is that the national debt kept rising over the last year, and is heading towards £1.8 trillion. | |
| The ONS says: | |
| Public sector net debt (excluding public sector banks) was £1,753.5 billion at the end of June 2017, equivalent to 87.4% of gross domestic product (GDP), an increase of £128.5 billion (or 3.6 percentage points as a ratio of GDP) on June 2016. | |
| It’s more useful to look at national debt in terms of the size of an economy, rather than as a raw figure. | |
| So in GDP terms, Britain’s debt pile is now its largest since the 1960s, when it was paying down the cost of the second world war: | |
| 11.21am BST | 11.21am BST |
| 11:21 | 11:21 |
| Here’s my colleague Phillip Inman’s take on today’s public finances: | Here’s my colleague Phillip Inman’s take on today’s public finances: |
| The UK borrowed more than expected in June, with the country’s budget deficit rising to £6.9bn - almost 50% higher than the same month last year. | The UK borrowed more than expected in June, with the country’s budget deficit rising to £6.9bn - almost 50% higher than the same month last year. |
| Higher inflation forced the government to spend more on financing its debt mountain, other factors included lower GDP growth in the first quarter, a fall in corporation tax receipts and a bigger than expected contribution to the EU budget in June . Analysts said the deficit could now exceed forecasts over the rest of the financial year. | Higher inflation forced the government to spend more on financing its debt mountain, other factors included lower GDP growth in the first quarter, a fall in corporation tax receipts and a bigger than expected contribution to the EU budget in June . Analysts said the deficit could now exceed forecasts over the rest of the financial year. |
| The Treasury said the persistent shortfall in the government’s income compared with spending illustrated the need for a “credible fiscal plan” and that allowed ministers to support “sound public finances” while “promoting a stronger economy”. | The Treasury said the persistent shortfall in the government’s income compared with spending illustrated the need for a “credible fiscal plan” and that allowed ministers to support “sound public finances” while “promoting a stronger economy”. |
| But opposition parties were quick to say that the higher deficit showed austerity had failed and delivered weaker public services without strengthening the public finances or the economy...... | But opposition parties were quick to say that the higher deficit showed austerity had failed and delivered weaker public services without strengthening the public finances or the economy...... |
| More here: | More here: |
| Updated | Updated |
| at 11.22am BST | at 11.22am BST |
| 11.13am BST | 11.13am BST |
| 11:13 | 11:13 |
| Here’s some more details on the public finances, via the Press Association: | Here’s some more details on the public finances, via the Press Association: |
| The ONS said Government spending rose by 8.3% to £59.9bn in June compared with last year, while tax receipts lifted by 4.6% to £54.3bn. | The ONS said Government spending rose by 8.3% to £59.9bn in June compared with last year, while tax receipts lifted by 4.6% to £54.3bn. |
| The Treasury saw VAT climb by £400m to £11.4bn over the period, as income tax takings also stepped up by £800m to $12.7 billion. | The Treasury saw VAT climb by £400m to £11.4bn over the period, as income tax takings also stepped up by £800m to $12.7 billion. |
| However, corporation tax dropped by £200m to £4.8bn last month. | However, corporation tax dropped by £200m to £4.8bn last month. |
| 10.58am BST | 10.58am BST |
| 10:58 | 10:58 |
| Labour: Borrowing figures show government's failure | Labour: Borrowing figures show government's failure |
| Labour’s shadow chancellor John McDonnell has laid into the government over today’s public finances. | Labour’s shadow chancellor John McDonnell has laid into the government over today’s public finances. |
| McDonnell argues that chancellor Hammond should raise taxes on large corporations and the rich, to help fund a pay rise for public sector workers. | McDonnell argues that chancellor Hammond should raise taxes on large corporations and the rich, to help fund a pay rise for public sector workers. |
| He says: | He says: |
| “These figures reveal the continued failure of Philip Hammond and the Conservatives. | “These figures reveal the continued failure of Philip Hammond and the Conservatives. |
| “Seven years of Tory cuts have left our economy weaker, with falling wages, yet the deficit has not been eliminated two years after they claimed it would be, and the national debt continues to rise. | “Seven years of Tory cuts have left our economy weaker, with falling wages, yet the deficit has not been eliminated two years after they claimed it would be, and the national debt continues to rise. |
| “The Chancellor should stop handing out massive tax giveaways to big businesses and the super-rich, and instead give our hard-pressed public sector workers a pay rise, so we can end the travesty in our country of nurses having to rely on food banks. | “The Chancellor should stop handing out massive tax giveaways to big businesses and the super-rich, and instead give our hard-pressed public sector workers a pay rise, so we can end the travesty in our country of nurses having to rely on food banks. |
| “Only a Labour government will set out a serious plan for the public finances, with strategic investment underpinned by our fiscal credibility rule, to help build the high wage, high skill economy of the future for the many, not the few.” | “Only a Labour government will set out a serious plan for the public finances, with strategic investment underpinned by our fiscal credibility rule, to help build the high wage, high skill economy of the future for the many, not the few.” |
| 10.55am BST | 10.55am BST |
| 10:55 | 10:55 |
| The rise in borrowing in June means chancellor Philip Hammond has less wriggle room for tax cuts or spending rises in his next budget. | The rise in borrowing in June means chancellor Philip Hammond has less wriggle room for tax cuts or spending rises in his next budget. |
| Howard Archer of EY Item Club says: | Howard Archer of EY Item Club says: |
| “June’s shortfall highlights the fact that the public finances are still far from healthy. | “June’s shortfall highlights the fact that the public finances are still far from healthy. |
| At the same time rising public dissatisfaction with austerity and the public sector pay cap is exerting pressure on the government to recalibrate fiscal policy in November’s Budget. | At the same time rising public dissatisfaction with austerity and the public sector pay cap is exerting pressure on the government to recalibrate fiscal policy in November’s Budget. |
| However it currently looks more likely that there will be limited adjustments, rather than radical changes, to the fiscal approach.” | However it currently looks more likely that there will be limited adjustments, rather than radical changes, to the fiscal approach.” |
| Bad news for Chancellor as #UK #public #finances see clear y/y deterioration in June; PSNBex comes in at £6.9bn vs £4.8bn in June 2016. | Bad news for Chancellor as #UK #public #finances see clear y/y deterioration in June; PSNBex comes in at £6.9bn vs £4.8bn in June 2016. |
| Updated | Updated |
| at 11.02am BST | at 11.02am BST |
| 10.39am BST | 10.39am BST |
| 10:39 | 10:39 |
| UK public finances, what the experts say | UK public finances, what the experts say |
| The jump in Britain’s borrowing last month shows that the public finances have deteriorated, according to John Hawksworth, PwC chief economist. | The jump in Britain’s borrowing last month shows that the public finances have deteriorated, according to John Hawksworth, PwC chief economist. |
| But he’s hopeful that Britain could still hit its deficit targets, as last year’s borrowings have been revised down. | But he’s hopeful that Britain could still hit its deficit targets, as last year’s borrowings have been revised down. |
| Hawksworth says: | Hawksworth says: |
| “June saw a modest deterioration in public finances, with borrowing around £2 billion higher than a year earlier. This followed two months in which the deficit was almost identical to the year before. The general pattern is consistent with the OBR’s March forecast that we might see some increase in the budget deficit this financial year, as the economy slows and some one-off favourable factors from last year unwind. | “June saw a modest deterioration in public finances, with borrowing around £2 billion higher than a year earlier. This followed two months in which the deficit was almost identical to the year before. The general pattern is consistent with the OBR’s March forecast that we might see some increase in the budget deficit this financial year, as the economy slows and some one-off favourable factors from last year unwind. |
| “Nonetheless, the deficit may still come in below the OBR’s £58 billion forecast for 2017/18, given that the deficit in 2016/17 is now estimated to be £5.5 billion less than the OBR projected in March. So the increases in borrowing we are now seeing are from a lower base. | “Nonetheless, the deficit may still come in below the OBR’s £58 billion forecast for 2017/18, given that the deficit in 2016/17 is now estimated to be £5.5 billion less than the OBR projected in March. So the increases in borrowing we are now seeing are from a lower base. |
| Sam Tombs of Pantheon Economics fears that the public finances show that UK growth was weak in the last three months (leading to less tax being taken). | Sam Tombs of Pantheon Economics fears that the public finances show that UK growth was weak in the last three months (leading to less tax being taken). |
| June's UK public finances show growth in tax receipts has remained below 2016's rate, consistent with GDP growth having remained weak in Q2: pic.twitter.com/jrQLQm6Tty | June's UK public finances show growth in tax receipts has remained below 2016's rate, consistent with GDP growth having remained weak in Q2: pic.twitter.com/jrQLQm6Tty |
| 10.36am BST | 10.36am BST |
| 10:36 | 10:36 |
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| 10.24am BST | 10.24am BST |
| 10:24 | 10:24 |
| Today’s public finances also show that corporation tax receipts fell by £200m in June (year-on-year), helping to push the deficit up. | Today’s public finances also show that corporation tax receipts fell by £200m in June (year-on-year), helping to push the deficit up. |
| VAT, income tax and stamp duty receipts rose, though: | VAT, income tax and stamp duty receipts rose, though: |
| 10.19am BST | 10.19am BST |
| 10:19 | 10:19 |
| The UK government has responded to the public finances, by admitting that Britain’s national debt is too high. | The UK government has responded to the public finances, by admitting that Britain’s national debt is too high. |
| A Treasury spokesman says: | A Treasury spokesman says: |
| ‘Today’s release shows that our national debt, at £65,000 for every household, is still too high and leaves us vulnerable to any future shocks. | ‘Today’s release shows that our national debt, at £65,000 for every household, is still too high and leaves us vulnerable to any future shocks. |
| That is why we have a credible fiscal plan to get debt falling and deliver the sound public finances needed for a stronger economy and higher living standards.” | That is why we have a credible fiscal plan to get debt falling and deliver the sound public finances needed for a stronger economy and higher living standards.” |
| The government’s current plan is to eliminate the deficit by midway through the next decade (around 10 years later than former chancellor George Osborne once promised....) | The government’s current plan is to eliminate the deficit by midway through the next decade (around 10 years later than former chancellor George Osborne once promised....) |
| 10.07am BST | 10.07am BST |
| 10:07 | 10:07 |
| Inflation and EU contributions pushed deficit up | Inflation and EU contributions pushed deficit up |
| Digging into today’s disappointing public finances, you can see that the spike in inflation has pushed Britain’s borrowing up. | Digging into today’s disappointing public finances, you can see that the spike in inflation has pushed Britain’s borrowing up. |
| That’s because the UK has issued index-linked bonds, whose interest payments are linked to the retail prices index. | That’s because the UK has issued index-linked bonds, whose interest payments are linked to the retail prices index. |
| RPI was 3.5% in June, up from 1.6% a year ago, which has driven up the cost of servicing Britain’s national debt. | RPI was 3.5% in June, up from 1.6% a year ago, which has driven up the cost of servicing Britain’s national debt. |
| As this chart shows, Britain’s interest payments jumped by £1.2bn in June, from £3.7bn to £4.9bn. | As this chart shows, Britain’s interest payments jumped by £1.2bn in June, from £3.7bn to £4.9bn. |
| This chart also shows that Britain’s payments to the EU jumped by £700m in June. | This chart also shows that Britain’s payments to the EU jumped by £700m in June. |
| The ONS says: | The ONS says: |
| In June 2017, the UK paid £1,249 million to the EU budget through GNI and VAT based contributions, which are made net of the UK rebate. This payment consisted of our standard monthly VAT and GNI based contribution of £991 million, along with a £258 million payment adjustment covering earlier years, which will be subject to a further UK rebate. | In June 2017, the UK paid £1,249 million to the EU budget through GNI and VAT based contributions, which are made net of the UK rebate. This payment consisted of our standard monthly VAT and GNI based contribution of £991 million, along with a £258 million payment adjustment covering earlier years, which will be subject to a further UK rebate. |
| The higher UK fiscal deficit in June was due to higher debt interest ( RPI based) and a higher EU contribution #BoE #GDP | The higher UK fiscal deficit in June was due to higher debt interest ( RPI based) and a higher EU contribution #BoE #GDP |
| Updated | Updated |
| at 10.10am BST | at 10.10am BST |
| 9.47am BST | 9.47am BST |
| 09:47 | 09:47 |
| The public finances report also shows that Britain is on track to borrow more this financial year than in 2016-17. | The public finances report also shows that Britain is on track to borrow more this financial year than in 2016-17. |
| As you can see, borrowing is already up compared with a year earlier: | As you can see, borrowing is already up compared with a year earlier: |