|Date:||21 February 2013|
|Authors:||Rowena Crawford , Carl Emmerson and Gemma Tetlow|
Today the Office for National Statistics and HM Treasury published Public Sector Finances January 2013. 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 2012−13.
Rowena Crawford, a Senior Research Economist at the IFS, said:
“As the Chancellor prepares for his Budget next month, he will likely be disappointed by today’s public finance figures. January is an important month for receipts but, although growth in income tax receipts was strong, this was partially offset by very weak growth in corporation tax receipts. Together this leaves tax receipts running below the growth forecast for the year as a whole. Spending continues to run higher than forecast, due to strong growth in spending on both welfare benefits and on the delivery and administration of public services. As a result borrowing is now on course to be almost £7 billion higher this year than the OBR forecast in December. Therefore borrowing is more likely to be slightly higher rather than slightly lower than last year’s level, although much uncertainty remains and things could still change in the final two months of the year.
What matters more than the level of borrowing this year is the outlook for revenues and spending in the medium term. Some of the extra borrowing so far this year is due to Whitehall departments underspending by less than assumed. This may not persist and therefore might not concern the Chancellor – in particular if the money is being spent well. Potentially more concerning is the low growth in tax receipts and the high growth in spending on welfare benefits: were these to persist into future years then the large planned fiscal tightening might need to be increased.”