Response to new ONS public sector finances data

Today's borrowing figures continue the pattern seen so far this year. Over the first half of 2021-22 public sector net borrowing was £108 billion. This is over £100 billion lower than that borrowed over the first half of last year and is also lower than the £152 billion forecast for the first half of 2021-22 at the time of the March Budget. Of course, this is much higher than was seen in 2019, or was expected prior to the pandemic. 

It will doubtless please the Chancellor that in next week's Budget he will be able to announce that borrowing over the whole of 2021-22 will be lower than feared back in March. But while this is welcome, what matters more is the extent to which any improvement in borrowing persists beyond this year. This will, in turn, be determined by factors such as how complete a recovery the economy makes and how much the cost of financing much-elevated government debt rises. Also important will be policy decisions by the Chancellor - most obviously the extent to which the large package of tax rises announced in March and September are implemented and whether next week's Spending Review will be able to keep to what would be quite tight plans for day-to-day spending on many public services.