So much for George Osborne’s “deficit reduction” strategy – the latest figures show that borrowing is higher than ever.
Today’s data release by the Office for National Statistics reveals that public borrowing rose to £10bn last month, £2.7bn higher than a year ago and the worst figure ever recorded for the month of April.
It’s worth noting that the difference is largely due to Labour’s 50 per cent tax on bank bonuses over £25,000, which raised £3.5bn last year. Osborne’s decision not to repeat the tax (as Ed Balls has demanded) means that revenue is significantly lower this year.
Then there’s the fact that the economy hasn’t grown for the last six months. The 0.5 per cent growth we saw in the last quarter didn’t even recover the lost output of the previous quarter, in the words of Sunder Katwala, “a 0.5 per cent increase on the reduced figure doesn’t make up for the 0.5 per cent fall from from a higher base”. As Osborne’s critics have persistently warned, anaemic growth means a slower pace of deficit reduction.
At the Budget, Osborne was forced to announce that borrowing would be £44bn higher than expected. Today’s figures mean that it will be higher still. As a result, there’s every possibility that the Chancellor will fail to meet his defining pledge to eliminate the structural deficit by the end of this parliament.