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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Commons confidential: Comrade Corbyn the coverstar

Milne's messages, Chilcot rumours, and why the Evening Standard may have backed Zac.

Tony Blair’s first flatmate, Charlie Falconer, will find himself in a difficult spot should Jeremy Corbyn stick to his guns when the Chilcot report is published on 6 July. The current Labour leader, a former chair of the Stop the War Coalition, is on record denouncing the campaign in Iraq as an “illegal war” and supporting a war crimes trial for his predecessor-but-two.

Every nudge and leak suggests that Chilcot’s weapon of mass destruction will eviscerate Bomber Blair. The whisper in Westminster is that Baron Falconer might feel honour-bound to quit as shadow justice secretary in the House of Lords should Comrade Corbyn back a plan to send his old housemate to the Hague.

My snout recalled overhearing a conversation in which Falconer’s solicitor wife asked her hubby: “How can you work for a man who thinks Tony is a war criminal?” Please do tell us, Charlie.

Comrade Corbyn is the first Labour leader for many a year, perhaps the first in the history of the class struggle, to be chosen as a cover star by Theory & Struggle, the journal of the Marx Memorial Library. The front-page pose is entirely social-realist by design: the bearded leader is pictured staring purposefully off to the reader’s left – of course. We may be sure that any likeness to an image of Karl Marx on the same page was purely non-coincidental.

An old school chum of the bombastic backbencher Karl McCartney let slip a clue about the source of the Lincoln Tory’s touchiness with regard to his personal brand. Back in 2013, the MP failed to persuade parliamentary authorities to spend £15,000 reprinting his surname on Commons documents, including the Hansard verbatim report of proceedings and business, with a superscript “c” instead of the lower case “Mc” on the line. Perhaps his obsession with presentation dates from when classmates nicknamed him Shergy, after Shergar, the Epsom Derby winner that was stolen and killed 33 years ago. On the upside, equine comparisons never unseated Princess Anne.

Maybe Sadiq Khan’s team, still puzzling over why the London Evening Standard editor, Sarah Sands, endorsed its rival Zac Goldsmith when the Tory was a nailed-on loser, should examine its man’s housing policy. Sands’s purchase of two flats in the redeveloped BBC TV Centre at White City wasn’t exactly the “first dibs” scheme envisaged by the Mayor of London to widen ownership.

Hacks using the Telegram encrypted messaging app, handy for receiving clandestine documents from anxious leakers, were amused to discover that Seumas Milne signed up for the service in May. Corbyn’s spin doctor may be unaware that everybody on the network with his number was notified of the covert arrival.

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad