Government borrowing leaps by 33% in tax year’s first quarter | Business News
Higher spending and debt interest payments pushed government borrowing up by a third in the first three months of the tax year, according to official figures.
The Office for National Statistics (ONS) said public sector net borrowing, excluding the effects of bank bailouts, came in just shy of £7.2bn in June – more than double the figure in the same month last year and the highest June figure since 2015.
Economists had expected a sum of £3.9bn.
It took the total between April and June to £17.9bn – a 33% leap on the first quarter in 2018.
Back in March, the independent Office for Budget Responsibility (OBR) forecast an increase in borrowing in the current financial year as the UK prepares to leave the EU and ministers signalled a loosening of the purse strings following almost a decade of austerity to bring the deficit down.
The OBR predicted it would ht £29.3bn in 2019/20. The total for the last financial year was £24.7bn.
The UK’s official economic forecaster added a further prediction on Thursday when it suggested that borrowing could jump by £30bn a year and plunge the UK into recession if the UK was to leave the EU without a withdrawal deal.
The findings were released just days before the conclusion of the Conservative leadership contest – a vote by Tory members that will deliver a new UK prime minister next week.
While both Jeremy Hunt and Boris Johnson have refused to take the option of no deal off the table, only Mr Johnson has signalled that the Halloween deadline is nailed on for a decision.
Each has also made a series of commitments on public spending – pledges that the Institute for Fiscal Studies has said would cost billions to carry through.
Figures for borrowing in the early part of a financial year do not always offer a strong guide to a full-year outlook, largely because certain bills and tax receipt windfalls shift.
The ONS noted a 1.5% increase in tax receipts in June compared to the same month a year ago – hitting £58.7bn.
Total central government expenditure rose by £4.3bn – or 7.2% – to £64.8bn.
The ONS noted a “significant increase” in spending on goods and services. The UK’s contribution to the EU last month also rose – by £400m – compared with June 2018.
Howard Archer, chief economic adviser to the EY ITEM Club, said of the borrowing: “On the basis of April-June, it is headed for £31.4bn.
“However, it is premature to draw any conclusions as monthly public finance data can be prone to significant revisions as well as being influenced by specific factors.
“Much will depend on Brexit developments and how the economy reacts.”