Today the Office for National Statistics and HM Treasury published Public Sector Finances January 2012. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first ten months of financial year 2011−12.

Rowena Crawford, a Research Economist at the IFS, said: "Today's figures show that growth in central government current receipts was weak last month, due to a fall in VAT receipts and low growth in income tax and capital gains tax receipts that was only partially offset by strong growth in corporation tax receipts. Spending by central government on public services last month was higher relative to last year for the first time in five months, but an overall fall in this item of spending so far this year is still contributing to total central government current spending running below the forecast for the year.

A simple extrapolation of the data over the last ten months suggests that borrowing is on course to come in at around £116bn. This is lower than the £127.1 billion forecast by the OBR in the November 2011 Economic and Fiscal Outlook and lower than the £124.2bn forecast in our IFS Green Budget earlier this month. However it is important to bear in mind that borrowing over the next two months might not follow the pattern seen over the previous ten. In particular, VAT receipts may be expected to slow and spending may be expected to accelerate.

The Chancellor would no doubt be pleased if borrowing this year were to come in lower than the OBR forecast. However the composition of this lower borrowing suggests that it is unlikely to feed through into lower than currently forecast borrowing in future years. Despite this caveat, the worsening economic outlook seen over the last year has increased pressure for a temporary fiscal stimulus package in next month's budget, and lower-than-expected borrowing this year may give the Chancellor scope for such a policy without damaging the credibility of the government's commitment to deficit reduction."

Headline Comparisons

• Central government current receipts in January were 2.8% higher than in the same month last year. The Office for Budget Responsibility's (OBR) latest Economic and Fiscal Outlook, published in November 2011, forecast an increase in receipts relative to last year's levels of 4.8% for the year as a whole and of 5.1% for the period from November 2011 to March 2012. The latest figures show an increase relative to last year's level of 4.7% for the year to date, with a 5.0% increase between November 2011 and January 2012 compared to the same three months last year.

• Central government current spending in January was 3.0% higher than in the same month last year. The latest figures show an increase relative to last year's level of 1.6% for the year to date, with an increase of 0.2% between November 2011 and January 2012 compared to the same three months of 2010−11. The OBR's latest forecast implies an increase relative to last year's level of 3.2% for the year as a whole and of 4.4% for the period from November 2011 to March 2012.
• Public sector net investment in January was £4.0bn, the same as was spent in January 2011. Public sector net investment between April 2011 and January 2012 was £18.6bn, which is 28.2% lower than in the same ten months of 2010−11. The OBR's latest forecast was that net investment in 2011-12 would be £28.6bn, which is 25.0% below last year's level.

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