Office for National Statistics

Less room to spend for UK's new PM

ING’s Chief International Economist tweets

Warning over higher borrowing

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The data about the UK's public finances has prompted the accountancy body the Institute of Chartered Accountants in England and Wales (ICEAW) to express concern about long-term stability.

"The new Prime Minister and Chancellor will need to focus more on the bigger picture if stability is not to become a thing of the past for the UK's public finances," Sumita Shah, regulatory policy manager, said.

"Both prime ministerial candidates are promising to cut taxes and increase public spending, with investments in strategic projects such as the Northern Powerhouse and rolling out high-speed broadband to rural areas.

"However the consequence will be even higher borrowing, reversing the progress made over the last few years to reduce the deficit".

'The economy is flagging'

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More on that news that government borrowing was much higher then expected in June.

Pantheon Macroeconomics says the numbers are a "tentative sign that the economy is flagging".

Even after higher interest payments and bigger EU contributions are stripped out, borrowing was still a "hefty" £1.3bn higher than last year, its UK economist, Samuel Tombs, said.

Nevertheless, he expects the person who replaces Philip Hammond as chancellor to "tear up the existing rules" that limit borrowing to 2% of GDP and announce a "giveaway budget" in the autumn.

"The Conservatives are desperate to improve their poll rating and public support for austerity has crumbled, so a fiscal boost is coming."

Deficit v debt

ONS Public Sector Finance Statistician tweets

Why has borrowing gone up?

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The Office for National Statistics explains that in June 2019, the public sector spent more money than it received in taxes and other income, meaning it had to borrow £7.2bn, £3.8bn more than in June 2018.

Why? The ONS says central government receipts in June 2019 increased by £800m - or 1.5% - compared with June 2018, to £58.7bn, while total central government expenditure increased by £4.3bn - or 7.2% - to £64.8bn.

This came as income tax and National Insurance Contributions increased £300m and £500m respectively compared with June 2018.

The ONS said there was "a notable increase" in expenditure on goods and services of £1.2bn, while the UK’s contribution to the European Union increased by £400m compared with that in June 2018.

The government's debt repayments rose by £2.1bn.

BreakingHighest UK June borrowing since 2015

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Public sector net borrowing in June was £7.2bn, according to the Office for National Statistics.

That's up from £3.3bn in June 2018 and higher than all the forecasts in a poll of economists by Reuters.

It's the highest June borrowing since 2015, the ONS said.

Charity shops boost UK retail sales

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More on the Office for National Statistics retail sales data, which showed an unexpected rise in June.

"Retail as a whole saw a return to growth in the month of June, mainly due to growth in non-food stores with increased sales in second-hand goods, including charity shops and antiques," ONS statistician Rhian Murphy said.

But, she said: "Retail sales growth slowed in the latest three months as food stores saw falling sales for the first time this year and department stores continued their steady decline".