This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2014/mar/21/government-borrowing-rises-february-george-osborne

The article has changed 3 times. There is an RSS feed of changes available.

Version 1 Version 2
Government borrowing edges up in February Government borrowing edges up in February
(about 3 hours later)
An expected spike in local authority spending pushed up the government's borrowing by £9.3bn last month, but left its deficit reduction plan on track, according to official figures. A rise in local authority borrowing pushed up the government deficit by £9.3bn last month, but left George Osborne's deficit reduction plan on track, according to official figures. The Office for National Statistics said that for the first 11 months of the 2013/14 financial year borrowing was down £4.4bn on the same months last year to £99.3bn.
Councils clubbed together borrowing into February that would normally be spread over several months, generating a temporary rise in the public sector's net borrowing. Coming days after the chancellor said the public finances would be in surplus by 2018-19, the latest monthly data showed the Treasury remains on course to hit its borrowing target of £107.8bn when the financial year ends in April. Osborne said better than expected growth in the next couple of years would close the public spending deficit – the difference between tax income and government spending – at a faster rate than predicted last year.
The Office for National Statistics said that for the first 11 months of the financial year 2013-14, borrowing, excluding the transfer of the Royal Mail pension plan and the transfers from the Bank of England asset purchase facility fund, was £99.3bn. This was £4.4bn lower than the same period in 2012-13, when it was £103.8bn. Howard Archer, chief UK economist at IHS Global Insight, said the figures represented mixed news for George Osborne. He said the underlying improvement in February was undermined by comparison with February 2013, when the shortfall was limited by a £2.3bn transfer from the sale of 4G mobile phone licences.
Howard Archer, chief UK economist at IHS Global Insight, said the figures represented mixed news for George Osborne. "To meet his revised PSNBR [public sector net borrowing requirement] target of £107.8bn in 2013-14, the chancellor now needs the shortfall to come in at £8.5bn in March. This may prove difficult to achieve, given that there was a deficit of £11.4bn in March 2013," he said."
He said the underlying improvement in February was undermined by comparison with February 2013, when the shortfall was limited by a £2.3bn transfer from the sale of 4G spectrum licenses.
"To meet his revised PSNBR [public sector net borrowing requirement] target of £107.8bn in 2013-14, the chancellor now needs the shortfall to come in at £8.5bn in March. This may prove difficult to achieve, given that there was a deficit of £11.4bn in March 2013," he said.
"If the chancellor immediately just misses his newly set targets for 2013-14, it could increase scepticism that the chancellor will achieve his fiscal targets further out. The latest public finances highlight the fact that there is still an awfully long way to go in getting the public finances into decent shape.""If the chancellor immediately just misses his newly set targets for 2013-14, it could increase scepticism that the chancellor will achieve his fiscal targets further out. The latest public finances highlight the fact that there is still an awfully long way to go in getting the public finances into decent shape."
The Office for Budget Responsibility said the Treasury would still balance the budget in 2018-19 despite higher than expected GDP growth over the next couple of years. Analysts dismissed the rise in council borrowing, saying it was a figure that would normally be spread over several months, but said concerns remained that cuts in public sector spending relied on cuts in vital services to support the deficit reduction strategy. Jonathan Loynes, chief European economist at Capital Economics, said it was worrying that tax receipts were still not responding to the economic recovery as positively as might have been hoped.
In a revised analysis of the government's finances to coincide with this week's budget, the OBR said the annual deficit would be lower than forecast last year in each year until 2018-19, when it would register a small surplus.
The Treasury came under fire on Thursday from the Institute for Fiscal Studies, which highlighted the Treasury's reliance on spending cuts in vital services to support the deficit reduction strategy. It said plans for savings across Whitehall and from a tax avoidance clampdown were also uncertain and could reap much less than predicted.
Jonathan Loynes, chief European economist at Capital Economics, said it was worrying that tax receipts were still not responding to the economic recovery as positively as might have been hoped.
"Meanwhile, public spending growth accelerated as departments did not match the significant underspend seen at the end of the last fiscal year," he said.
Nonetheless, he said the OBR's forecast of a further drop in the underlying deficit to £95bn in 2014-15 could prove to be a bit pessimistic if the economy expands by around 3%, as some forecasters, including Capital Economics, expect.
"Overall, though, the big picture is still that there is a very long way to go before the public finances are restored to anything close to full health," he said.