UK borrowing falls ahead of spring Budget
The UK government borrowed less than expected in December, official data has shown, as chancellor Sajid Javid prepares to boost spending in his March Budget.
Borrowing in December was £4.8bn, less than expected and down £0.2bn compared to the same month a year earlier, the Office for National Statistics (ONS) said.
Yet for the financial year so far – March to December – UK government borrowing stood eight per cent higher than a year earlier at £54.6bn
Corporate tax receipts slipped 3.4 per cent year on year in the financial year to December, the biggest drop since 2012/13, in a sign of the weakness of the economy.
Overall public debt – the amount the government owes – was £1.82 trillion at the end of 2019, an increase of £35.5bn on December 2018. However, as a share of GDP, the figure fell 0.9 percentage points to 80.8 per cent.
The data comes as Javid prepares for a major Budget on 11 March which will set the tone of the administration after Prime Minister Boris Johnson’s emphatic election victory in December.
Javid and Johnson have turned against the fiscal conservatism of previous chancellors George Osborne and Philip Hammond and have pledged to boost spending on infrastructure, health and education.
Javid has re-written the government’s so-called fiscal rules to allow him to markedly increase capital spending on things like infrastructure. He has also given himself more leeway on day-to-day spending, yet has promised to balance this measure in three years’ time.
However, the chancellor’s room to maneouvre in the March Budget has been limited by a generous increase in public spending announced in September, said Andrew Wishart, UK economist at consultancy Capital Economics.
“The chancellor can’t write a blank cheque,” Wishart said, adding that his focus would be on investment rather than day-to-day spending.
“We suspect he will increase investment by about £10bn a year – 0.5% of GDP,” he said. “ “That would provide a substantial and much-needed boost to economic activity.”