Economy: UK Government borrowing fell in May
Some surprising figures have been unveiled in the UK this month. Because of a rise in VAT receipts and income tax, UK borrowing fell to £10.13 billion last month, down from £12.35 billion this time in 2014. It’s turned heads because it’s the lowest borrowing the figure the UK has seen for nearly 8 years, and it’s excellent news for the economy in what has been a very rocky period. Income tax receipts alone recorded their highest level in 4 years, up 5.3% on last year.
The office for national statistics (ONS), who produced the figures in an annual report, also estimated that public sector borrowing in the financial year to march 2015 was just over £89 billion, or 4.9% of GDP. Although they admitted that this estimate was slightly higher than their previous one, it was still almost £10 billion lower than last year’s total.
Economy analysts in the UK have commented on the news, saying that the outlook for chancellor George Osborne was extremely positive at the start of this fiscal year. “The chancellor is currently on track to significantly undershoot his fiscal targets for 2015-16, but major questions remain ahead of the extra Budget on 8 July over the new Conservative government’s ability to meet its ambitious fiscal targets over the longer term, ” said a chief UK economist from IHG Global Insight.
As if to capitalise on what he knew was going to be good news, the chancellor said last week that he would endeavour to bind future governments to maintaining a budget surplus during times when the economy was in growth. However, it’s not all positive for Mr Osborne, as many questions still hang over the future of the UK’s economy. Many experts have commented on the rise in public sector debt (now approaching £1.5 trillion) as being particular troubling for the chancellor.
“The last public finance data before the Budget emphasised the scale of the challenges the chancellor still faces,” said John Hawksworth, chief economist at PwC.
George Osborne has pledged to eliminate the budget deficit by 2019, but that is to be the case experts estimate that he’d need to cut £40 billion in unprotected departments in the coming years – something which many think will be a step too far for the UK Government.