The deficit is even higher than we thought – again
The UK's deficit is even higher than first thought, according to new figures released today by the Office for National Statistics (ONS) this morning.
Public sector net borrowing – the amount of cash the government has to borrow to plug the difference between its income and outgoings – came in at £76bn for the 2015/16 financial year. Previous estimates suggested the government borrowed £74bn, though the government had targeted a shortfall of just £72.2bn.
The miss – of more than five per cent – is even more embarrassing for the chancellor given that he made the latest forecasts just two weeks before the end of the financial year, in the March Budget.
The uncontrollable deficit |
|
| OBR March forecast (16 March) | £72.2bn |
| ONS First estimate (21 April) | £74bn |
| ONS Second estimate (24 May) | £76bn |
Borrowing for April 2016 – the first month of this financial year – was down on last year, coming in at a total of £7.2bn compared to £7.5bn last year. The fall would have been sharper, but the government spent £800m more on investment this year than it did last year.
The pound sterling held on to early gains against the US dollar despite the news. It was worth $1.4541in early morning trading, up 0.4 per cent on the day.
Deficit £3.8bn higher for 2015-16 than @OBR_UK projected confirm @ONS – coming down, but another missed target on Govt fiscal policy
— William Bain (@William_Bain) May 24, 2016
"The Chancellor has started the fiscal year on the back foot," said Paul Hollingsworth, UK economist at Capital Economics.
Howard Archer of IHS Global said the "disappointing figures" cast "doubts about [Osborne's] ability to meet his long-term objective of a surplus."
The Office for Budget Responsibility (OBR) has given the chancellor just better than a 50/50 chance of meeting his plan to run a budget surplus by the end of the decade. George Osborne is planning to run a budget deficit of £56.5bn this year.