Public finance bulletin: January 2012

Carl Emmerson
Gemma Tetlow

Published on 24 January 2012

Today the Office for National Statistics and HM Treasury published Public Sector Finances December 2011. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first nine months of financial year 2011−12. Gemma Tetlow, a Programme Director at the IFS, said: "Today's figures continue to suggest that public sector borrowing is on course slightly to undershoot the latest official forecast this year. Although there was strong growth in tax revenues in December this is unlikely to persist for the remainder of the year. Despite this, borrowing is still more likely than not to undershoot the official forecast as central government spending on public services has, for the fourth month in a row, run below the level spent in 2010-11 rather than above as was planned by the Government for the year as a whole.Receipts of income tax and corporation tax in January, on which we will get data next month, will be particularly informative. Large receipts of both these taxes are expected, coming from self-assessment payments, income tax on any bonuses paid in January and a large quarterly instalment of corporation tax. How large these receipts turn out to be is critical for borrowing this year but at this stage uncertain." <h4>Headline Comparisons</h4> <ul><li>Central government current receipts in December were 7.3% higher than in the same month last year. Receipts between April and December 2011 were 5.0% higher than in the same months of 2010. 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 4.9% for the year as a whole and of 5.3% for the period from November 2011 to March 2012. This is significantly lower than the 6.9% growth for the year as a whole previously forecast by the OBR at the time of the March 2011 Budget. </li> <li>Central government current spending in December was 0.8% lower than in the same month last year. Spending between April and December 2011 was 1.5% higher than in the same months of 2010. 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. This is slightly lower than the 3.6% growth for the year as a whole previously forecast by the OBR at the time of the March 2011 Budget. </li> <li>Public sector net investment in December was £2.9bn, £0.3bn higher than was spent in December 2010. Public sector net investment between April and December 2011 was £17.6bn, which is 19% lower than in the same nine months of 2010. The OBR's latest forecast was that net investment in 2011-12 would be £28.6bn, which is 25% below last year's level. </li></ul>