Public finances improve in October

Written By Unknown on Kamis, 21 November 2013 | 19.21

21 November 2013 Last updated at 06:03 ET

The UK's public finances improved in October, as a recovering economy and housing market boosted tax revenues.

Borrowing, excluding the cost of interventions such as bank bailouts, fell to £8.08bn in October, down from £8.24bn in the same month last year, the Office for National Statistics (ONS) said.

The fall came despite the £2bn of shares sold in the flotation of Royal Mail not being included in the figures.

Total net public debt rose to £1.207tn.

This takes net public debt to 75.4% of gross domestic product (GDP), the highest percentage for the month of October on record.

Political reaction

Responding to the data, a Treasury spokesman said: "Britain's hard work is paying off, the government's long term economic plan is working, and the deficit is down by a third.

"But today's figures remind us that the job is far from done and a growing economy alone will not be enough to eliminate the deficit."

Chris Leslie MP, Labour's shadow chief secretary to the Treasury, said: "David Cameron and George Osborne have now borrowed more in the three years since May 2010 than Labour did over 13 years.

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The job of repairing our public finances is still a major challenge"

End Quote David Kern British Chambers of Commerce

"This is the cost of their economic failure and the three damaging years of flatlining and falling living standards we have seen since the election."

'Further improvement'

The government's target is to keep public sector net borrowing for 2013-14 at £120bn or below, representing about 7.5% of GDP.

Seven months into the current 2013-14 tax year, the deficit, excluding the cost of bailouts and the effect of the Royal Mail pension transfer, is £64.8bn, down 8.2% compared with the same period last year.

Analysts now expect the government's target to be achieved, with a final borrowing figure for 2013-14 of £105bn based on current projections.

In October, central government receipts reached £48.7bn, 3.2% higher than in the same month last year, as the recovering housing market helped to boost stamp duties by nearly 46%.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The October public finance data show further underlying improvement compared to a year ago, thereby providing more support to Chancellor George Osborne as he prepares his Autumn Statement for delivery on 5 December.

"Indeed, the chancellor must be feeling an awful lot happier about life now than when he was preparing his Autumn Statement last year."

But David Kern, chief economist at the British Chambers of Commerce (BCC), said: "While improvements may be partly down to the faster rate of economic growth, the pace of [deficit] reduction remains modest.

"Corporation tax receipts were lower than at the same point in 2012, and the job of repairing our public finances is still a major challenge."


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