A bit more on borrowing less

George Osborne George Osborne has a busy week ahead of him

True to form, the borrowing numbers have changed again with the release of the March public finance figures - the last set of monthly numbers for the 2012-13 financial year. And this time the revision has been in a helpful direction for George Osborne.

I pointed out yesterday that revisions had already eliminated the £100m fall in the chancellor's preferred measure of borrowing between 2011-12 and 2012-13.

I also noted that the figures were likely to change again today - and though his critics would be hoping the numbers would go up, it was perfectly possible, on past experience that this year's borrowing would be revised down.

That's what has happened. The new figures show borrowing in 2012-13 (excluding transfers from the Bank of England and the Royal Mail) will be £120.6bn, slightly below the Budget forecast of £120.9bn. So borrowing last year was not £100m lower than the year before but a heady £300m lower - a difference of roughly 0.02% of Britain's GDP.

So the chancellor's fans will say: "I told you so." And most economists will say: "So what?"

Two things worth remembering: first, these figures, too, will change.

The March numbers are especially subject to revision, because most government departments and local authorities don't really know, yet, exactly how much they spent in 2012-13. There's a huge amount of guesswork involved. Which is one reason why the 2011-12 borrowing figure has fallen by more than £5bn in the past 12 months.

The borrowing figure for the last year of the Labour government, 2009-10, fell by a similar amount, just between Alistair Darling's last Budget in spring 2010 and George Osborne's first.

The other point is that even if borrowing is very slightly lower than it was in 2011-12, it is still a great deal higher than the Chancellor planned back in 2010. The 2012-13 borrowing forecast built into his first Budget was £89bn.

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

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  • rate this

    Comment number 148.

    I support the view that Stephanie Flanderers who suggests "The other point is that even if borrowing is very slightly lower than it was in 2011-12, it is still a great deal higher than the Chancellor planned back in 2010. The Chancellor appears to be [off track] regarding the level of borrowing. The economy has hit the buffers several times and he has no answer.

  • rate this

    Comment number 147.

    And. Government revenue = £600 Bn. Government spending = £700Bn. So an anual overspend of £100 Bn ( 120 actually) Benefit spending £200 Bn. 94% of that is pensions child benefit and low paid workers. So about 6% goes to unemployed (despit Osboumes garbage). So how much growth needed ? about 3% or 1 % for three years. But world market in recession. That is THE problem. Balance of trade stuffed.

  • rate this

    Comment number 146.

    Sorry that should read £1.18 trillion debt.

  • rate this

    Comment number 145.

    144 Well presumably its 2% of £1.8 trillion Per annum.
    which is err £20 billion per annum. So its the intrest rate that gets you. Hence Spain stuffed a 7%

  • rate this

    Comment number 144.

    What is interestig (pun intended) about our current economig growth trajectory is the amount of growth required to generate revenue that will pay the interest on sums already borrowed and the more to come. I would like to know these numbers but accept that Pi gets in the way.

  • rate this

    Comment number 143.

    140 anecdote ~ A reminder of the naughty old days and all that stuff.

    Ian Dale's Diary ~ Wednesday, February 20, 2008

    Do You Know How Big the PSBR Is?


    Read it and.......well. Who knows hehehehe. We are all so incredibly naughty, we were all through the naughties.

  • rate this

    Comment number 142.

    The more interesting figures will be those for Q1GDP due out tomorrow morning. But the most interesting recent economic news has been the debunking of the Reinhart/Rogoff analysis that provided the intellectual underpinning to Osborne’s austerity policies. All credit to Thomas Herndon!

  • rate this

    Comment number 141.

    #84/137 FG what about the army vehicle contract that blair deliberatly place with man/steyr (ERF) rather than the TOTAL UK solution , which has cost the UK jobs, just to curry euo favors ?

    gues you would say that was thatchers fault too ?

  • rate this

    Comment number 140.

    I like to think that we have been naughty and cannot decide whether to carry on. I pointed out yesterday that pennance is nearly run its course. It is clever to adjust our finances as we are but global growth is no longer a part of our equation and like it or not, people get bored with decline. There will be change. Of government.

    Besides naughty, we were stupid and greedy. Very naughty.

  • rate this

    Comment number 139.

    #129 ER. IR35 was a "tax Dodging sop" to the back benches like fox hunting. Its attacked people like me whom work 300 miles from home, have expenses to cover as a result BUT did nothing to hit the RICH CITY bankers and other labour supporter whom work for the BBC as "CONTRACTORS" pay low tax on thier millions and then donate to the labour party

  • rate this

    Comment number 138.

    @133. springheeledjaks
    Valid, but for one thing. Most of what is done by the public sector would not be required if we weren't forced to have it.
    Hospitals, defense, education yes.
    2000 different taxes? No, 1 would be good
    2000 different benefits? No, 1 would be good.
    'elf and safety? Planning? No, let me live my life.
    Police? Maybe, not sure at the moment too corrupt.
    Politicians? Not a chance

  • rate this

    Comment number 137.

    @84. FauxGeordie
    Some of it yes... some of it is spent on BMW's etc.
    Unfortunately most of the money the government spends directly goes abroad - chinese army uniforms, indian nhs software, american fighter jets, german police cars..... we can make ALL of those things here and keep the money in the UK where it will employ people and allow investment in companies that can export and grow

  • rate this

    Comment number 136.

    Some people here with severely limited understanding of this world
    E.g. Since when did the really, really simple arithmetic of public sector employment become "an economic model"?

    Suspect they're PS workers.

    They're paid out of the tax take, they're a drain on the tax take. Their value must be measured in terms of:

    Is what they do worth spending taxes on?
    Could it be done by fewer people?

  • rate this

    Comment number 135.

    ONS official deficit was 86.2B, stripping out "one-offs" gives deficit of 120.6B i.e. one-offs of 34.4B which is 28B from Post Office pension transfer and 6.4B QE profits (how can I write that...). So to be clear "one-offs" do not include 2.3B profits from SLS and 2.3B profits from 4G sale.

    13. above is correct. Please follow his link.

  • rate this

    Comment number 134.


    Dear Shaun,

    You missed "The new figures show borrowing in 2012-13 (excluding transfers from the Bank of England and the Royal Mail) will be £120.6bn, slightly below the Budget forecast of £120.9bn. So borrowing last year was not £100m lower than the year before but a heady £300m lower.." in Stephnie's text. But so did the 40 readers who recommended your comment.

  • rate this

    Comment number 133.

    @97. Chris
    " Public workers are always a cost."
    Using that same argument you are robbing your poor employer of your salary. They are not being given public money as a gift, they are paid in exchange for work just as you are. Your theoretical private worker would probably still need to pay someone to provide those services at cost + profit. There are times that will be cheaper, but usually not.

  • rate this

    Comment number 132.

    Gideon has doubled the debt. Government spending and the deficit aren't going down because like a square jawed fiscally responsible chancellor he's spending it on large scale unemployment and running a vast debt.

    Thats what Thatcher did too. 3 million on the dole 2 million incapacity allowance. Course she had the oil money

    Georgie will sell every last national asset before taxing his paymasters

  • rate this

    Comment number 131.

    129. Eatonrifle
    Tax is already paid on all PAYE and dividends the same as an employee. It only affects NI in that all payments including dividends (dividends have no NI on them) are treated as salary (with 5% allowable expenses). The result of this however is that both Employees and Employers NI has to be paid resulting in a far greater tax rate than an employee whose E'Ers NI is paid for them.

  • rate this

    Comment number 130.

    "As public spending isn't reducing there is no austerity"

    Tory Boys tying themselves in knots. Unemployment is going up

    Discretionary spending is certainly being slashed. 500 libraries have gone. But they are for losers anyway

    Whats really good news is that interest payments on the bank bailout keep rolling out the door. To the people who caused the crash in the first place

    Trebles all round!

  • rate this

    Comment number 129.

    127 IR35

    IR35 is the United Kingdom tax legislation designed to tax "disguised employment" at a rate similar to employment.

    So made to pay your tax then.

    Perhaps its tax dodgers that are bankrupting the UK?


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