The Independent :
George Osborne will have to find further savings if he wishes to mitigate the pain of tax credit cuts Getty.
The weakest set of October public finance figures for six years has given George Osborne a serious headache ahead of next week’s Autumn Statement.
The borrowing figures for last month came in well above expectations, meaning the Chancellor is likely to fall short of his budget deficit reduction target set by the Office for Budget Responsibility only in July.
George Osborne’s Autumn Statement: Five things you need to know
Borrowing shot up to £8.2bn for the month – £1.1bn higher than the same month last year.
Most City experts had pencilled in a £1.1bn fall to £6bn. The last time the Government borrowed more in an October was in 2009, when the deficit for the month was £9.6bn and the economy was still mired in recession.
The figures are the latest in a run of disappointments in the monthly public finances. In the seven months of the financial year so far, cumulative borrowing is £54.3bn.
Although 10.9 per cent below last year, it means the Chancellor needs a minor miracle to hit the Office for Budget Responsibility’s £69.5bn deficit target for the full year.
Analysts said it was likely the OBR would revise up its full-year 2015-16 deficit forecast next month and that the deterioration would make the Chancellor’s job of mitigating his controversial tax credit cuts more difficult.
“A critical question will be to what extent the OBR believes that this has implications for the fiscal targets further out,” said Howard Archer of IHS Global Insight.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the deficit could hit £80bn this year, adding that the “terrible borrowing figures provide a grim backdrop to the Autumn Statement”.
He said: “Barring revisions, borrowing would have to be an implausible 48 per cent lower year-over-year in the second half of this fiscal year for the official forecast to be met.”
George Osborne will have to find further savings if he wishes to mitigate the pain of tax credit cuts Getty.
The weakest set of October public finance figures for six years has given George Osborne a serious headache ahead of next week’s Autumn Statement.
The borrowing figures for last month came in well above expectations, meaning the Chancellor is likely to fall short of his budget deficit reduction target set by the Office for Budget Responsibility only in July.
George Osborne’s Autumn Statement: Five things you need to know
Borrowing shot up to £8.2bn for the month – £1.1bn higher than the same month last year.
Most City experts had pencilled in a £1.1bn fall to £6bn. The last time the Government borrowed more in an October was in 2009, when the deficit for the month was £9.6bn and the economy was still mired in recession.
The figures are the latest in a run of disappointments in the monthly public finances. In the seven months of the financial year so far, cumulative borrowing is £54.3bn.
Although 10.9 per cent below last year, it means the Chancellor needs a minor miracle to hit the Office for Budget Responsibility’s £69.5bn deficit target for the full year.
Analysts said it was likely the OBR would revise up its full-year 2015-16 deficit forecast next month and that the deterioration would make the Chancellor’s job of mitigating his controversial tax credit cuts more difficult.
“A critical question will be to what extent the OBR believes that this has implications for the fiscal targets further out,” said Howard Archer of IHS Global Insight.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the deficit could hit £80bn this year, adding that the “terrible borrowing figures provide a grim backdrop to the Autumn Statement”.
He said: “Barring revisions, borrowing would have to be an implausible 48 per cent lower year-over-year in the second half of this fiscal year for the official forecast to be met.”
