Today the Office for National Statistics and HM Treasury published Public Sector Finances July 2014. 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 2014–15.
- Central government current receipts in July were 3.3% higher than in the same month last year, excluding the impact of transfers related to the Asset Purchase Facility (APF). Taking receipts over April to July together, these were 2.1% higher than in the same four months of 2013. This is lower than the 5.0% growth forecast for the year as a whole by the OBR at the time of the March 2014 Budget, but there is good reason to believe that the average growth in receipts will be higher over the remainder of the financial year. Receipts in the early months of last year were particularly high for two reasons. First, the Exchequer received £0.9 billion from a tax on Swiss bank accounts. Second, some high income individuals responded to the reduction in the top rate of income tax in April 2013 by shifting income from the 2012–13 tax year into 2013–14. These have the effect of depressing the growth in receipts in the early months of 2014–15, and the latter will tend to boost growth in income tax receipts in the final three months of this year.
- Central government current spending in July was 2.0% higher than in the same month last year, and taking the first four months of this financial year together, spending has been 1.3% higher than in the same months of 2013. This is lower growth in spending than the 2.0% increase forecast by the OBR in March for the year as a whole.
- Public sector net investment in July was £1.7 billion, the same as was spent in July last year. Together, public sector net investment between April and July 2014 has been £5.9 billion. This is £0.7 billion higher than over the same four months in 2013. The OBR’s March 2014 forecast was for net investment over the whole of 2014–15 to be £27.9 billion, which is 12.9% above last year’s level (£24.7 billion).
- Public sector net borrowing in July was £0.8 billion, around half of the £1.6 billion borrowed in the same month of last year once cash flows relating to the APF are excluded. Borrowing is lower in July than in many other months of the year because it is one of the four months of the year when a large proportion of corporation tax payments are made (the others being April, October and January). Excluding APF transfers, borrowing for the first four months of this financial year has been 7.8% higher than over the same period last year. This compares to the 11.4% fall in borrowing forecast for the year as a whole by the Office for Budget Responsibility (OBR) in March 2014. However, the comparison between borrowing over the first four months of this year and last year is affected by the unusually high receipts of income tax and from the Swiss capital tax in the early months of 2013–14 mentioned above. Over the rest of the financial year the comparison between borrowing this year and last is likely to look more favourable.