UK government borrowing rises

UK government borrowing rose by half a billion pounds in June.

According to the Office for National Statistics, public sector net borrowing, excluding interventions such as bank bailouts, was £14.4bn last month.

While tax revenues increased in the month by 3.6 per cent to £40.9bn, total government spending only dipped by less than 1 per cent to £52.4bn.

This is up from £13.9bn in June 2011, and raises doubt over the government’s ability to meet full-year targets to bring down borrowing.

Borrowing in 2011-12 was also revised downwards. The ONS has said today that borrowing in the last financial year was actually £125.7bn, down from the original estimate of £127.6bn that it made last month.

The figures come after the International Monetary Fund said this week that the government should slow the pace of the tough austerity measures if the economy fails to pick up.

Colin Edwards, economist at the Centre for Business and Economic Research (Cebr), said, "The ability of the government to borrow at historically low interest rates – the yield on 10-year government bonds currently stands around 1.5 per cent - provides some room for manoeuvre in the government’s attempts to reduce the deficit. Indeed, the debate over the pace of fiscal consolidation gathered momentum this week as the International Monetary Fund (IMF) slashed its forecast GDP growth for the UK to 0.2 per cent for 2012 from 0.8 per cent in its April forecast, bringing it closer to Cebr’s most recent forecast for a 0.2 per cent contraction this year.

"Against this backdrop, the OBR forecast for public sector net borrowing to fall this year by around £10bn looks under threat. Hence, the government is between a rock and a hard place: economic growth is minimal and the deficit appears to be rising again. The IMF’s remarks this week mean the debate around easing the pace of fiscal consolidation is likely to gather momentum in the lead up to the Autumn Statement."

This article first appeared in economia.

Photograph: Getty Images

Helen Roxburgh is the online editor of Economia

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Jeremy Corbyn to tell Labour: "Prepare for a 2017 general election"

The newly re-elected Labour leader will urge the party to unite.

Jeremy Corbyn is expected to warn Labour to prepare for a general election in 2017 at conference on Wednesday.

The newly re-elected Labour leader will say: "Whatever the Prime Minister says about snap elections, there is every chance that Theresa May will cut and run for an early election. 

“So I put our party on notice today. Labour is preparing for a general election in 2017, we expect all our members to support that effort, and we will be ready whenever it comes."

Urging the party to rebuild trust, he is to declare: "Every one of us knows that we will only get there if we accept the decision of the members, end trench warfare and work together to take on the Tories."

He will also set out ten Labour policy pledges, which include full employment, public ownership of services and a national education service.

On immigration, he is expected to say: "A Labour government will not offer false promises. We will not sow division or fan the flames of fear. 

"We will instead tackle the real issues of immigration – and make the real changes that are needed."

This includes reinstating the migrant impact fund, and tackling the exploitation of migrant workers.