Borrowing: is it up or is it down?

 
George Osborne George Osborne has a busy week ahead of him

This is shaping up to be an even more nail-biting week for the chancellor than we already thought.

Not only will we discover on Thursday whether the UK has formally gone back into recession, but on Tuesday we might learn that government borrowing rose in 2012-13, after all.

You'll remember the question of whether the deficit in the past year was lower - or higher - than in 2011-12 was one of the great statistical excitements of this year's Budget.

Having wrong-footed the shadow chancellor last November, it became rapidly apparent on Budget day that George Osborne had moved heaven and earth to be able to do the same again.

Excluding most (but not all) of the big temporary factors affecting the borrowing numbers, George Osborne was able to stand up and say that the budget deficit would be very, very slightly smaller in 2012-13 than in 2011-12: £120.9bn, compared with £121bn in 2011-12.

I told the story of how he achieved that feat, despite very disappointing tax revenues.

Of course, that £100m is less than a drop in the ocean, in fiscal terms - a tiny fraction of the average revision to the deficit numbers, which happen months, even years afterwards. Forecasts of future borrowing get revised even more often, and more dramatically.

As far as economists are concerned, the important point from the Budget was that borrowing was going to be broadly flat for three years - leading the director of the Office for Budget Responsibility (OBR) to suggest that the progress cutting the deficit had "stalled". But it was politically important for the chancellor that he could cling to that tiny continued fall.

Osborne's narrative

Why am I reminding you of all this now? Two reasons.

The first is that on Tuesday we get the "actual" borrowing figures for March, the last month of the 2012-13 tax year.

When the OBR drew up the budget numbers, it had only partial data for February and none at all for March. So we might easily find out tomorrow that borrowing in the last tax year wasn't £120.9bn at all.

It's perfectly possible, on recent experience, that borrowing will turn out to be lower than that Budget forecast. But it wouldn't take much a revision upwards to ruin Mr Osborne's narrative.

The second and more important reason to go through this now is that officially speaking, Mr Osborne's £100m margin has already gone away. It turns out that it was revised away by the Office for National Statistics (ONS), the day after the Budget, when all of us were thinking about other things.

The day after the Budget is traditionally when studious journalists look for hidden bombs in the many documents released alongside the Budget, which they didn't get a chance to read. This year, it turns out, we should also have been looking in the latest public finance figures from the ONS, released on the 21 March.

We didn't really look at these, because we assumed (rightly) that the February borrowing figures were largely incorporated in the Budget forecasts already. But as it happens, the same release also showed the relevant borrowing figure for 2011-12 had been revised down slightly - by £100m, in fact.

So, even before we see Tuesday's public finance figures for March, we can say that officially, borrowing last year was not just "broadly flat" but actually flat.

Or at least flat to one decimal point, which is as many as the chancellor has previously had the temerity to mention. (He might, just, be able to say it has fallen as a share of GDP - but that, too, would depend on the number of decimal points, at which point things start to get a bit silly).

On Tuesday the numbers will probably change again. Even the figures we see for March are based on a lot of estimates for departmental spending and borrowing by local authorities, all of which are likely to be revised. The "final" figure for 2011-12 has itself gone down by £5bn since it was first released a year ago.

So, everything could change and probably will. But if you are one of those who care whether the chancellor cut the deficit in 2012-13 - I thought I should let you know that the latest official version of history says he didn't.

 
Stephanie Flanders, Economics editor Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    0

    Comment number 49.

    Couldn't find anywhere more relevant to say this, here will do, About the "Economics" phone-in R4 today. Three guests economists all appalling half-asleep complacent placemen who, as status-quo requires, gave the impression, yet again, that there are no cogent change agendas. There are.

    Henry George - Progress and Poverty, Positive Money and Steve Keen's Debunking Economics.

  • rate this
    0

    Comment number 48.

    Let's be honest, 'borrowing going down' and not up is the marginal difference between failure and disaster for Osborne and co. If the defecit were actually increasing (and it still might) Plan A would surely be busted for good

    And only once the deficit is removed completely (and that is so far down the line now) can we actually start paying off our debts

    No more weasel words from the Tories!

  • rate this
    0

    Comment number 47.

    So the government has "only" increased the UK's debt by another 6.3% of the deficit!?

    The economy is in worse shape than ever and it still specialises in parasitism. Official economic figures are ever more suspicious. The rule of law doesn't apply to financial fraud. And we are discussing if it was actually 0.05% of GDP less in debt increase than last year!?

    Is everybody insane!???

  • rate this
    0

    Comment number 46.

    39.NoBritwantstolookaftertheold
    So the easiest part of the deficit has been taken away, the first 25%. How we gonna do the next 75%
    ~
    Only this month Govt has spent 2x £10m new money. Just stopping new spend would be a start.

  • rate this
    +1

    Comment number 45.

    #30 JfH the average level of private debt is actually perfectly managable. Household debt is £48k of mortgage and £6k of other debt (cars, credit cards, overdraft). It is not the average which is a concern but the distribution of the debt

  • rate this
    +2

    Comment number 44.

    41.pietr8
    The trouble with the economy is that it's run by politicians.
    ~
    Maybe you didn't mean to post like that, meant something else, but as posted that is patently not so. 'Here today, gone tomorrow politicians' do not run the economy, they merely interfere with it. ;-)

    If they all disappeared today, the economy will still go on!

  • rate this
    +3

    Comment number 43.

    "Proceeds from the 4G mobile licences auction and another payment from the central bank in February boosted government coffers, said the ONS."


    So, after one-off factors borrowing has not come down - there's no Olympis or big state sell off this financial year to cover up the boy Gideon & Slasher Camerons' gross mismanagement of the economy.....

  • rate this
    0

    Comment number 42.

    IIRC, UK govts from both big parties have tried to reign in spending (& borrowing) in some way in just about every decade since the '60s.

    And failed.

    The Canadians also failed at this many times but finally got it right in the '90s. It involved not spending new money & being rigourous about cuts. Dave & GO have ignored or forgotten that lesson from history.

  • rate this
    +1

    Comment number 41.

    The trouble with the economy is that it's run by politicians.

  • rate this
    +1

    Comment number 40.

    No @ 39. The comment before gives the percentage as 0.25% (i.e. no real gain for all this pain).

    Speaking of which, as other comments have alluded to) the phrase you are looking for in the thired from last pragraph, Stephanie, is 'decimal places' and not "decimal points".

    @ 31 If you put a number with 2 decimal points in Excel you get a "#VALUE!", Harvard professors take note....

  • rate this
    +1

    Comment number 39.

    So the easiest part of the deficit has been taken away, the first 25%. How we gonna do the next 75% without civil unrest and debates at the dining table?

  • rate this
    +1

    Comment number 38.

    So now we know the deficit has hardly fallen (.3bn - .25%). What indicators are clearly demonstrating the government's success? Correct, none and this after three years in office. Even if there is growth in the last quarter the latest round of draconian expenditure cuts will quickly turn it to a negative for the current quarter when allied with continuing devaluation of spending power by inflation

  • rate this
    +2

    Comment number 37.

    The whole basis for this and any other Governments plans is to keep the major banks afloat, they will manipulate whatever figures are necessary to achieve this one and only aim.

    Supporting the Banks is Plan A to Z , we are unimportant...

  • rate this
    0

    Comment number 36.

    Why, oh why, can't politicians just live within OUR means, and spend only what WE generate in taxation?

    But, no! They have to spend on vanity projects, vote-buying, overseas aid and more - all of which they have to borrow to cover

    Somebody, anybody, please get a grip

  • rate this
    +1

    Comment number 35.

    See comment number 5

    "Borrowing in March fell to £15.1bn from £16.7bn a year earlier, excluding interventions such as bank bailouts, said the Office for National Statistics (ONS)."

    See what I mean

  • rate this
    0

    Comment number 34.

    Wait till the banksters from the IMF land in 2016. CUT CUT CUT.

    As a mad old US president once said


    'You ain't see nothin yet'

  • rate this
    0

    Comment number 33.

    We are saved!

  • rate this
    0

    Comment number 32.

    Smaller than zero?

  • rate this
    0

    Comment number 31.

    So what does a number with more than one decimal point look like?

  • rate this
    +3

    Comment number 30.

    Osborne shouldn't care if it is up or down what really matters is PRIVATE DEBT. This is the part of the economy that is & will go on crippling the Nation for a generation. His & his party's lunacy is the DELIBERATELY strive to increase house prices to produce an entirely fake & fraudulent apparent recovery just for the election in 2015!

    He is destroying any hope of an end to the DEPRESSION.

 

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