Public finance bulletin: August 2012

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

Rowena Crawford, a Senior Research Economist at the IFS, said:

"Today's figures continue to be disappointing, with further weak growth in receipts in July, particularly from corporation tax. Relatively low growth in receipts so far this year, combined with relatively high growth in spending on net social benefits, has contributed to borrowing being £11.6 billion greater than over the first four months of 2011-12. The government will need receipts to grow more rapidly and spending growth to slow over the remainder of the year if they are to meet the OBR's latest forecast that borrowing will fall from £125 billion last year to around £122 billion this year. However, it is still early in the financial year and we should be cautious about inferring too much from data on only the first four months."

Headline Comparisons

• Central government current receipts in July were 0.8% lower than in the same month last year. Receipts over the four months April to July were 1.1% 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 3.9% above 2011-12 levels.

• Central government current spending in July was 5.1% higher than in the same month last year. Spending over the four months April to July was 3.6% 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 July was £1.7bn, £0.4 billion more than was spent in July last year. Together, public sector net investment during the first four months of 2012-13 has been £5.2bn (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 9.3% more than was spent between April and July in 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 £26.9 billion (excluding the impact of Royal Mail and the SLS), which is 3.1% above last year's level.