Friday, October 19, 2012
Borrowing starts to move back in line
Posted by David Smith at 11:45 AM
Category: Thoughts and responses

One of the the regular themes here has been that it was premature to talk about a big borrowing overshoot on the basis of monthly figures for the first few months of the fiscal year. The distortions in the data, including a new Treasury system for monitoring spending meant that few sensible conclusions could be drawn.

So it is proving. Public sector net borrowing in September was 12.8 billion, 0.7 billion down on a year earlier. More significantly, revisions to earlier data mean that borrowing for the first half of the fiscal year, 65.1 billion, is only marginally up on the 62.4 billion figure for a year earlier.

Tax receipts in September, up by 3.7% on a year earlier, were stronger than in recent months. More details here on the numbers.

They are important in economic terms, but also important politically. Labour unwisely bet the ranch at its party conference on a big overshoot in borrowing this year. Oddly, it is is persisting with this attack even though the numbers are coming back towards official projections. But then Labour has a long way to go to get back credibility on the public finances.