Public borrowing

In the first seven months of the financial year the government borrowed £127.3 billion, down £103.4 billion compared to the same period last year but also the second largest on record. Borrowing is expected to reach £183 billion by the end of the financial year in April, down £140.1 billion from last year.

Britain borrowed £18.8 billion last month, which was down only £200 million on October last year and the second-highest reading for that month on record. Debt costs climbed to £5.6 billion last month, an increase of £3.8 billion from a year ago. City economists had expected public sector borrowing to fall to £13.8 billion, down from £21 billion in September. Receipts rose 6.2 per cent, or £3.8 billion, to £65.5 billion last month. The end of the government’s furlough and job support schemes resulted in spending dropping from £1.3 billion in September to only £200 million in October.

“Public borrowing is falling much less quickly than earlier this year, reflecting the slowing of the economic recovery and the pick-up in inflation,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said. The public sector net debt stood at £2.3 trillion at the end of last month, or 95.1 per cent of national income, a level not seen since the early 1960s.

“Notwithstanding our forecast that GDP growth will be soft over the next six months, our assumption of smaller long-term scarring suggests that the chancellor will meet his fiscal targets sooner than the OBR [Office for Budget Responsibility] expects,” he said.

Summarised www.sba.tax

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