UK public sector borrowing rose greater than anticipated in February, pushed by the price of the federal government’s power help schemes, however was nonetheless on monitor to undershoot the brand new official forecast for the fiscal yr.
Public sector web 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 best February borrowing since month-to-month data started in 1993, largely due to substantial spending on power 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 just below half of individuals’s power payments this winter.”
Borrowing rose regardless of the federal government’s receipts rising by £4.9bn in contrast with February final yr, reflecting larger tax receipts on labour and raised revenues from the power earnings levy.
Curiosity funds have been additionally decrease than in February final yr following the decline within the retail worth index that determines the price of index-linked gilts.
Nevertheless, the power worth assure for households and the power invoice aid scheme for companies boosted spending by £9.6bn in contrast with February final yr, elevating total 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 yr nonetheless to go, borrowing is heading in the right direction to undershoot the £152.4bn forecast by the Workplace for Finances Accountability for 2022-23, which was revised down final week from the £177bn forecast in November.
The undershooting is extra seemingly when bearing in mind the £8.6bn momentary distinction between the ONS and OBR’s estimates due to the remedy of pupil 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 yr to February confirmed that tax receipts have been 11.1 per cent larger than the identical 11-month interval a yr 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 yr enabled Hunt to expand free childcare, provide a £9bn tax break for companies and enhance pensions for the upper incomes on the Finances.
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 yr by which the fiscal rule requires debt to GDP to be falling is judged rolls on from 2027-28 to 2028-29.
Nevertheless, she added that “the massive threat is that the turmoil within the banking sector deepens the financial downturn and the latest enchancment within the public funds is blown away”.
