Public Finance Press Releases

IFS analysis of today’s public finance figures

Date: 21 July 2015
Authors:
Publisher: Institute for Fiscal Studies

Today the Office for National Statistics and HM Treasury published Public Sector Finances June 2015. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first three months of financial year 2015–16.

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

“Today’s figures suggest that receipts this year continue to grow strongly compared to last year, as was forecast by the Office for Budget Responsibility alongside the Budget earlier this month. The picture for central government spending is, as ever, complicated by timing issues: spending has grown less rapidly so far this year than forecast for the year as a whole, but is expected to pick up over the course of the year. Taken together, the government looks so far this year to be on course to enjoy the fall in borrowing forecast by the OBR two weeks ago.”

Headline comparisons

We should be cautious of interring or extrapolating too much from information on only the first three months of the financial year; in particular, there is only one month of data that was not known at the time the OBR made their latest forecasts published alongside the Summer Budget two weeks ago. Bearing this in mind, Table 1 compares the growth in government receipts and spending in June 2015, and over the year to date, with the growth implied for the year as a whole by the OBR’s forecasts made at the time of the March and July Budgets.

  • Central government current receipts were forecast to increase by 3.8% between 2014–15 and 2015–16 by the OBR in its July 2015 Economic and Fiscal Outlook; stronger performance than the 2.8% growth forecast by the OBR in March. Growth in receipts between April and June 2015 compared to the same months last year was 5.4%, and receipts in June 2015 were 4.4% higher than in June 2014.
  • Central government current spending was forecast to increase by 0.9% between 2014–15 and 2015–16 by the OBR in July (similar to the 0.8% increase forecast in March). Over the period April to June 2015 central government current spending has been 0.7% lower than over the same period in 2014, but this low growth in spending is largely driven by changes in the timing of grants paid to local government, which should unwind as the year progresses. Central government current spending in June 2015 was 3.0% higher than in June 2014.
  • Public sector net borrowing over the whole of 2015–16 was forecast by the OBR in July to be 22.1% lower than borrowing in 2014–15. This is a somewhat more favourable picture than that forecast in March (a decline in borrowing this year of 16.5% compared to last year), due primarily to the improved forecast for receipts. Over the year to date borrowing has been 19.6% lower than over the same three months of 2014–15.

Table 1: Growth in receipts and spending

 

 

Growth over 2015/16 as a whole implied by OBR forecasts in:

Growth compared to equivalent period in 2014 (outturn data):

 

 

March EFO

July EFO

April – June 2015

June 2015

Central government current receipts

 

2.8%

3.8%

5.4%

4.4%

Income tax, CGT and NICs

 

4.8%

4.2%

6.0%

4.1%

VAT

 

2.6%

3.8%

6.3%

6.0%

Corporation tax (cash)

 

1.4%

0.5%

13.6%

13.9%

Central government current spending

 

0.8%

0.9%

–0.7%

3.0%

Net social benefits

 

0.5%

0.8%

1.4%

3.6%

Debt interest

 

0.7%

2.9%

–1.7%

5.7%

Other CG current spending

 

0.9%

0.7%

–1.5%

2.4%

Public sector net investment

 

–3.0%

–7.4%

–4.9%

16.0%

Public sector net borrowing

 

–16.5%

–22.1%

–19.6%

–8.3%

Notes: Percentage growth rates implied by OBR forecasts are calculated using the £ billion forecasts for 2014–15 and 2015–16 published in the March and July EFOs.

Further information and contacts

For further information on today’s public finance release please contact: Rowena Crawford on 020 7291 4800, or email rowena_c@ifs.org.uk.

Next month’s public finances release is due to be published on Friday 21st August.

Relevant links:

This, and previous editions of this press release, can be downloaded from http://www.ifs.org.uk/publications/pf

Office for National Statistics, Public Sector Finances, June 2015: http://www.ons.gov.uk/ons/rel/psa/public-sector-finances/june-2015/index.html

Office for Budget Responsibility analysis of Public Sector Finances, June 2015: http://budgetresponsibility.independent.gov.uk/category/topics/monthly-public-finance-data/

Office for Budget Responsibility, Economic and Fiscal Outlook, July 2015: http://budgetresponsibility.org.uk/economic-fiscal-outlook-july-2015/

Office for Budget Responsibility, Economic and Fiscal Outlook, March 2015: http://budgetresponsibility.org.uk/economic-fiscal-outlook-march-2015/

Useful links and background information on the July 2015 Budget can be found at: http://www.ifs.org.uk/tools_and_resources/budget/505

ENDS

Notes to Editors:

1. All figures are on a basis that excludes the impact of the public sector banks.

2. Where possible we compare figures on an accruals basis with the Office for Budget Responsibility forecast.

3. Central government current spending includes depreciation.