Brown shaves £3bn off budget deficit
Chancellor Gordon Brown got off lightly yesterday when the public sector finance figures released by the Treasury looked much healthier than expected.
However, analysts suspect some sleight of hand in the way the figure has been calculated. The budget deficit narrowed to £14.6bn for the first six months of fiscal year 2005-2006, down from £17.6bn in the same period last year.
Brown was helped by a healthy set of tax receipts, but still looks likely to miss his targets for the year. The Chancellor wants to cut the deficit to £6bn this year; it was a whopping £17.6bn in financial year 2004-2005.
But the public sector net borrowing requirement (PSNBR) — the amount the chancellor needs to borrow to balance his books — was only down to £22.9bn for the last six months, compared to £23.6bn for the previous year. Brown had planned to cut borrowing for the entire year to £31.9bn after it reached £37.8bn in 2004-2005
However, the chancellor has again changed the measurement of the PSNBR, so it is hard to make accurate comparisons. Analysts at Investec said: “Although the Treasury’s March forecasts of a public sector net borrowing deficit of £32bn by year end still looks optimistic, with the scale of revisions that are a regular feature of these data, we would not rule it out of hand.