Public sector borrowing on course to overshoot OBR projections by £11bn

ONS reports a stronger January than last year, but the trend remains poor.

The ONS has released the public sector finances for January 2013, showing that the government ran a surplus of £11.4bn in the month, £5bn higher than in January 2012.

But as Nida Ali, economic advisor to the Ernst & Young ITEM Club, comments, the good news is largely a mirage:

Today’s figures demonstrate the problems caused by all of the statistical fudges of the past couple of years – the various transfers from the Bank of England, Northern Rock and Bradford & Bingley make it virtually impossible to decipher the underlying trend.

Although January’s headline number looks encouraging, it appears that the state of the public finances is worse than the government and the OBR had hoped for. Stripping out the one-off factors, net borrowing in the financial year-to-date is £7.5bn higher than last year. With just two months of data pending and last year’s deficit having been revised down, there is virtually no chance of borrowing being lower on a like-for-like basis in 2012/13 than in 2011/12.

Furthermore, the ONS has put a ceiling of £9.1bn on the amount of cash that can be transferred from the Central Bank to the government in 2012/13. Given that this also includes the payment from the Special Liquidity Scheme, it means that the reduction in borrowing caused by the transfers from the Bank of England’s Asset Purchase Facility will be £5bn less than the OBR had forecast.

However, even accounting for this setback and the lower than expected 4G proceeds, the government was still on course to miss the OBR’s 2012/13 borrowing forecast by a distance. Assuming that borrowing in the final two months of the financial year is the same as it was last year, the government is on course to overshoot the OBR’s 2012/13 forecast of £80.5bn by almost £11bn.

An £11bn overshoot even of the OBR's already depreciated forecast will be bad news indeed for the Chancellor. But the deficit is, at least, on course to be lower than it was last year; and January itself was strong, as the chart below shows:

Cumulative public sector net borrowing by month, excluding the temporary effects of financial interventions

Good news this month, then — but it only highlights how bad the news has been for the rest of the year.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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PMQs review: Jeremy Corbyn hammers David Cameron on green energy – but skips Syria

In a low-key exchange ahead of the Autumn Statement, the Labour leader covered two areas where the government is vulnerable: renewable energy and women's refuges. However, he failed to mention Syria and the Russian plane shot down by Turkey.

When PMQs precedes an Autumn Statement or Budget it is usually a low-key affair, and this one was no different. But perhaps for different reasons than the usual – the opposition pulling its punches to give room for hammering the government on the economy, and the Prime Minister saving big announcements and boasts for his Chancellor.

No, Jeremy Corbyn's decision to hold off on the main issue of the day – air strikes in Syria and the Russian military jet shot down by Turkey – was tactical. He chose to question the government on two areas where it is vulnerable: green energy and women's refuges closing due to cuts. Both topics on which the Tories should be ashamed of their record.

This also allowed him to avoid the subject that is tearing the Middle East – and the Labour party – apart: how to tackle Isis in Syria. Corbyn is seen as soft on defence and has been criticised for being too sympathetic to Russia, so silence on both the subject of air strikes and the Russian plane was his best option.

The only problem with this approach is that the government's most pressing current concern was left to the SNP leader Angus Robertson, who asked the Prime Minister about the dangers of action from the air alone in Syria. A situation that frames Labour as on the fringe of debates about foreign and defence policy. Luckily for Corbyn, this won't really matter as no one pays attention to PMQs pre-Autumn Statement.

Anoosh Chakelian is deputy web editor at the New Statesman.