Today the Office for National Statistics and HM Treasury published Public Sector Finances May 2012. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first two months of financial year 2012–13.

Rowena Crawford, a senior research economist at the IFS, said:
“Today’s figures indicate that over the last two months central government current spending has grown more quickly than forecast for the year as a whole, mainly due to relatively rapid growth in welfare spending in both April and May. Receipts have grown less quickly than forecast by the Office for Budget Responsibility for the year as a whole, in part due to weak corporation tax receipts in April. Receipts of income tax, national insurance contributions and capital gains tax were weak in May but, taking April and May together, have so far this year grown more quickly than forecast for the year as a whole. However, since we are only two months into the financial year, these figures do not provide much guide as to how the public finances will evolve over the whole year.

Today’s figures also include a number of large revisions to data from earlier months. Borrowing in 2011−12 is now estimated to have been £127.6 billion, above the £124.4 billion estimated in last month’s figures and also above – although close to – the £126.0 billion forecast by the Office for Budget Responsibility at the time of the March Budget. The revision to borrowing is in part due to a £1.0 billion downwards revision to estimated revenues and a £0.5 billion upwards revision to central government current spending. The significant remainder is due to a number of methodological and classification changes, which were already taken into account in the March Budget forecast.”

Headline comparisons

• Central government current receipts in May were 1.6% higher than in the same month last year. Receipts in April and May were 2.1% higher than in the same months of 2011. The Office for Budget Responsibility’s (OBR’s) forecast at the time of the March 2012 Budget implied that central government current receipts for the whole of 2012–13 would be 4.0% above 2011–12 levels.

• Central government current spending in May was 7.8% higher than in the same month last year. Spending in April and May was 3.7% higher than in the same months of 2011. The OBR’s forecast at the time of the March 2012 Budget implied that central government current spending for the whole of 2012–13 would be 3.1% above 2011–12 levels.

• Public sector net investment in May was £1.0bn, the same as was spent in May last year. Together, public sector net investment during April and May 2012 has been £1.6bn, excluding the impact of the transfer of assets from the Royal Mail Pension Plan to the public sector and the closure of the Special Liquidity Scheme (SLS). This is 17.3% lower than in the same two months of 2011. The OBR’s forecast at the time of the March 2012 Budget predicted that net investment over the whole of 2012–13 would be £27.3 billion, excluding the impact of Royal Mail and the SLS, which is 2.7% below last year’s level.

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