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

Comments

Cloud Bookkeeping

US FED rate rise.

The US Federal Reserve officials have indicated that they plan to resume increasing interest rates to control inflation in the world's biggest economy. During the June meeting, the Federal Open Market Committee reached a consensus to keep interest rates stable for the time being to evaluate whether further tightening of policy would be necessary. However, the majority of the committee anticipates that additional rate increases will be required in the future. The minutes of the meeting have recently been made public. According to the minutes, most participants believed maintaining the federal funds rate at 5 to 5.25 per cent was appropriate or acceptable, despite some individuals wanting to raise the acceleration due to slow progress in cooling inflation. Although Fed forecasts predicted a mild recession starting later in the year, policymakers faced challenges in interpreting data that showed a tight job market and only slight improvements in inflation. Additionally, officials gr...

EU business slide.

S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...

Tariffs on UK electric cars.

The European Commission has confirmed that it will continue with its plan to impose tariffs on electric cars exported between the UK and EU starting next year. This is due to the "rules of origin" requirement that mandates EVs traded across the English Channel to have 60% of their battery and 45% of their parts sourced from the EU or UK or face a 10% tariff. A senior Commission official, Richard Szostak, recently informed parliamentarians from the UK and EU that the bloc's battery investment has significantly declined, making the tariffs necessary to encourage domestic production. In 2022, the EU's share of global investment in battery production shrank from 41% to only 2% after the US offered substantial subsidies through its Inflation Reduction Act. Starting in 2024, car manufacturers in the UK will need to have 22% of their sales come from zero-emission vehicles, which means they may need to import EVs from the continent to meet this requirement. If EU carmakers ...

Search This Blog