The Staggers

The New Statesman’s rolling politics blog

A rare piece of good news for Osborne

Strong borrowing figures put Osborne on track to beat deficit forecast.

By George Eaton Published 21 February 2012 12:06

For the first time in months, there's some good news for George Osborne. Today's borrowing figures put him on track to easily undershoot the Office for Budget Responsibility's deficit forecast of £127bn and, after passing the £1 trillion mark last month, public sector net debt (£988.7bn or 63 per cent of GDP) is back below this symbolic threshold.

(N.B. Since the two are often confused, it's worth pointing out that the deficit is the annual difference between government spending and tax revenues, while the public debt is the sum total of all the past deficits.)

Contrary to the expectations of the right, the 50p tax rate is bringing in significant revenue. The monthly surplus of £7.8bn was the biggest since 2008 and total borrowing for the financial year (£93.5bn) is now £15.7bn lower than in the same period last year.

As ever, it's important to remember that is just one set of monthly figures and that Osborne is still set to borrow significantly more than expected in 2010. The ever-poorer growth figures (the economy shrank by 0.2 per cent in the last quarter) will hit revenues in the months and years to come.

But the latest numbers do leave the Chancellor with more room for manoeuvre. While Osborne may be tempted to bank the surplus, many in his own party and the Lib Dems would prefer him to use it to cut taxes and stimulate growth. In a rare interview on Newsnight last night, David Laws added his voice to those calling for Osborne to offer an accelerated rise in the personal allowance to £10,000. If the Chancellor has any sense, he'll heed this advice. As Ed Balls argued at the weekend, although a VAT cut should be the priority, any tax cuts are better than none.

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Tags: George Osborne

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24 comments

Tue, 2012-02-21 22:25 — Anthony (not verified)

Iggy Pop describing your average Labour/Limp Dick voter (Slightly edited version) -

Here comes Johnny Yen again
With the liquor and drugs
And a flesh machine
He's gonna do another strip tease

Hey man, where'd you get that loan?
I've been working since I bought the gimmick.

Well, I'm just a modern guy.
Of course, I've heard that in my ear before.

I'm worth a million in prizes
With my torture film
Drive a G.T.O.
Wear a uniform
All on a government loan.

I'm worth a million in prizes
Yeah, I'm through with sleeping on the sidewalk.

No more beating my brains,
No more beating my brains,
With the liquor and drugs,
With the liquor and drugs.

Tue, 2012-02-21 12:14 — tommy5d (not verified)

Errm... where in the figures does it show how much the 50p tax rate brings in?

Tue, 2012-02-21 12:15 — Shinsei67

Rare piece of good news ?

That's an odd claim seeing as all the recent economic data has surprised on the upside.

Strong January retail sales. Strong manufacturing and service sector PMI. Better consumer confidence numbers. Inflation numbers falling sharply. Even the unemployment numbers were better than feared and actual employment is increasing.

Most economists think the economy bottomed in October 2011 and has been improving since then. Forecasts are for 0.5% growth in 1Q calendar 2012.

Tue, 2012-02-21 12:20 — Matt Hurst (not verified)

Woohoo 0.5 growth....Triples all around.

Tue, 2012-02-21 12:22 — Eddy S (not verified)

January is always a surplus month, if it wasn't we would be in very serious shit but then the a few billion less than trillion total debt (not counting all the off-balance sheet stuff) isn't an amazing picture either.

Tue, 2012-02-21 12:24 — Matt Hurst (not verified)

"Strong January sales" - 0.9% drop in footfall, yes very strong. Employment will increase at christmas.

And manufacturing will only continue to improve if other countries improve and looking at the EU I doubt that will be the case.

The fact it's looking slightly up from below the previous lows isn't something to celebrate it's pathetic.

Tue, 2012-02-21 12:44 — celeriac (not verified)

Shinsei67, trolling between the Gaurdian forums and here?

Have you got a job?

Tue, 2012-02-21 12:56 — Minty Wibble (not verified)

@celeriac

Clearly it's as a Tory wonk employed to keep the 'lefties' busy dealing with nonesene. There has got to be more than a fair few on this site.

Tue, 2012-02-21 13:12 — Amergin

Never mind the surplus and the better than expected crap.
The SMIRK is back.

Tue, 2012-02-21 13:35 — Shinsei67

@Celeriac @Minty Wibble

How can it be "trolling" or "nonsense" when even the author of this piece said I made a "fair point".

This is a discussion thread. If you don't want to discuss economics then why bother posting here and being rude about those that are interested ?

Tue, 2012-02-21 13:42 — Mark Allan (not verified)

All I'm going to say is. One swallow does not a summer make.

Tue, 2012-02-21 14:37 — mcquade

Shinsei67, the author said you made ONE fair point, the others were dubious at best.

Tue, 2012-02-21 14:44 — mcquade

In January 2011, Osborne had a similar piece of good news.
Activity grew at its fastest pace since 1994 as exports drove new orders. The acceleration, reflected in the closely watched Markit/CIPS manufacturing purchasing managers' index (PMI), was sharper than expected at 58.3 – where any figure above 50 indicates expansion. Economists had forecast a reading of 57.

And look how that year turned out

Tue, 2012-02-21 15:35 — Awake!

'Contrary to the expectations of the right, the 50p tax rate is bringing in significant revenue'
Wow. U have access to data the rest of us don't.
So we've paid off 10 billion out of a trillion, and already there are demands to change course...

Tue, 2012-02-21 16:12 — super huey (not verified)

10Billion is nothing really... I mean Labour borrowed far far more than that in the 13 years in office and most of that went down the sink hole on bogus projects and contracts.

But GeorgeE is right, it's rare news but good news and good news is better than bad news which is the Labour scare tactic to impose even m ore gloom and doom in our world, in a bid to win our votes. If only they actually come up with viable policies on A4 instead of feeding us with 'post-it' notes.

Tue, 2012-02-21 16:46 — Marco (not verified)

Said it before and I'll say it again - Osborne is doing an outstanding job.

No doubt this will be ignored by Blanchflower et al, oh well who cares.

Tue, 2012-02-21 16:55 — matthew fox (not verified)

Osborne is doing an outstanding job, I mean, he had no plans to increase Vat and stands by the promise of 2 million new private sector jobs by 2015.

I see the increase in consumer confidence is being spun yet again.

The report from the Nationwide, came in at 47 out of 125 for Jan 12. The report came in a record low of 36 for Oct 11, but none of Osborne apologists had the guts to comment on that report, I wonder why?

As a rule, the average score for this report is 70, less then 70, we are in negative terrority, plus 70 is postive.

I take it the Right are going to keep mum about the rising oil price?

Diesel prices, came in at a record high, and even Russell Lynch of the London Evening Standard, who is a Osborne cheerleader, warned yesterday, how oil prices can have a serious impact on the economy.

Tue, 2012-02-21 17:21 — Silican (not verified)

Well you can thank our blind allegiance to US/Israeli foreign policy for those oil prices. When will we learn that supporting Israel is not in the UK's interest. It is actually immensely harmful in every conceivable way. The fact that Nelson Mandela remained on the US terrorist list until 2008 speaks volumes regarding the fairness and wisdom of US foreign policy. It is a case of the willfully blind leading the voluntarily blinkered.

Tue, 2012-02-21 17:36 — Shinsei67

@McQuade:

"Shinsei67, the author said you made ONE fair point, the others were dubious at best."

Nope, the author said I made a "fair point" overall and then specifically a "good point" about the overall massive improvement in service and manufacturing sector PMIs.

It is beyond belief that leftists such as yourself have to talk down the economy at every opportunity.

Why do you do it ?

Tue, 2012-02-21 17:38 — super huey (not verified)

@Silican - Damned if we do and damned if we don't.

If we stay out of it there will be protests outside screaming for action, blame will come upon us for being weak and selfish. If we go gun ho, we'll be hated by extremists who will be hell bent on terrorising us, arab nations will blame us for medling in their affairs etc...

catch 22... lose lose situation.

Tue, 2012-02-21 18:12 — Awake!

Foxy
'I take it the Right are going to keep mum about the rising oil price? '
the bloody right, always driving up oil prices in their 4.2 litre V8's... they can 'ave it, eh foxy??