-July PSNB-X Stg0.557bn vs -Stg2.837bn in July 2011
LONDON (MNI) – The public finances showed a surprise deficit in
July, as spending growth rose significantly during the month, figures
from National Statistics showed Tuesday.
The data, while affected by a special factor which has reduced
corporation tax, are disappointing and show the finances further off
track to meet the Chancellor’s Budget forecasts.
Public Sector Net Borrowing excluding financial sector
interventions stood at Stg0.557 billion in July, compared with a surplus
of Stg2.837 billion in the same month a year earlier. July is usually a
surplus month due to the timing of income and corporation tax receipts
and analysts had expected to see a surplus of Stg1.9 billion.
Receipts growth on an accrued basis was down 0.8% in July compared
with a year earlier. Corporation tax receipts were down 19.3% on the
year, part of which was due to a fall in corporation tax from the oil
sector, mainly due to the closure of the Elgin oil field due to a leak.
This had cut corporation tax receipts by around Stg1 billion.
For the financial year to date, receipts growth was up 1.1%
compared with a year earlier. Even stripping out the oil impact receipts
would still have been significantly below the full year Budget forecast
for growth of 3.9%.
Spending growth was also a major factor behind the deterioration
this month, with growth of 5.1% in July on the year, mainly due to
increased departmental spending. For the year to date spending was up
3.5%, but this was still above the full year forecast of 3%.
The government’s current budget surplus fell in July to Stg1.184
billion from Stg4.202 billion in July 2011.
Excluding financial interventions, net government debt fell
slightly on the month, dropping from Stg1.039 trillion to Stg1.032.4
trillion. Net debt as a percentage of GDP also dropped a little, falling
to 65.7% from 66.2% in June.
–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com
[TOPICS: M$B$$$,MABDS$]