Borrowing rises but George Osborne’s target in sight

GeorgeOsborne: On track to meet his full-year borrowing goal. Picture: Getty
GeorgeOsborne: On track to meet his full-year borrowing goal. Picture: Getty
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GEORGE Osborne remains on track to meet his full-year borrowing goal, figures yesterday suggested, despite the public finances taking a hit last month.

The Office for National Statistics said public sector net borrowing, after stripping out distortions such as bank bailouts and quantitative easing cash transfers, rose in June to £12.4 billion from £11.9bn a year earlier.

But there were sharp revisions to previous months, while the underlying deficit for the year to the end of March was revised down by £2.3bn to £116.5bn, chiefly due to higher tax receipts.

The independent Office for Budget Responsibility – set up to monitor the state’s finances – expects the deficit to come in at about £120bn in the current financial year, to March 2014, equivalent to 7.5 per cent of GDP.

ING Bank economist James Knightley said that while borrowing was “not quite as good as hoped for”, the numbers indicated that the government’s full-year forecast was achievable. “With economic activity starting to show some positive signs and with employment continuing to grow we would not be surprised to see the full year borrowing figure creeping below this forecast,” he said.

Howard Archer, chief UK economist at IHS Global Insight, added: “Peering through the fog caused by the various distortions, the underlying public finances appear to be essentially on track. The Chancellor will be fervently hoping that the economy can extend and build on its recent signs of improvement.”