Tuesday, July 20, 2010
Public borrowing high, private borrowing weak
Posted by David Smith at 10:30 AM
Category: Thoughts and responses

The latest numbers for the public finances were a touch disappointing. Though overall borrowing in June, £14.5 billion, was marginally lower than in June 2009, the current budget deficit rose from £11.9 billion to £12.6 billion. I would still expect an undershoot of the official £149 billion forecast for 2010-11 but the figures are a reminder that the path to lower borrowing will not be a smooth one. More details here.

Private borrowing, and lending, remains weak. Though the Council for Mortgage Lenders reported a sizeable jump in gross mortgage lending in June, up from £11.4 billion in May to £13.1 billion, the Bank of England's latest Trends in Lending report continued to be downbeat.

It says: "The flow of net lending to UK businesses remained negative in May, and was more so than in April. Credit availability to businesses overall increased, but by less than lenders had expected, according to the Bank of Englandís 2010 Q2 Credit Conditions Survey. In recent discussions, most major UK lenders reported that spreads over reference rates on new lending to large businesses had levelled off after recent declines. The Bankís network of Agents reported that demand for credit remained muted." More here.