Public sector net borrowing is well up, according to the latest official estimates.
Public sector net borrowing excluding interventions (PSNB ex) rose to £11.4bn in June, 50 per cent higher than PSNB ex in the same month last year, according to the Office for National Statistics (ONS).
In a preview of today's release, HSBC analysts forecast that PSNB ex would come in even higher, at £12.5bn this June. HSBC expected to see that the underlying deficit had widened as a result of the high base for income tax revenues from 2013.
The ONS said that central government receipts came in at just £44.1bn this June, £1.9bn lower than June last year. HSBC suggests that these high tax base effects should start to fall away from July. Government current expenditure and investment were also higher this June, up £2bn and £0.7bn respectively.
Rob Wood, chief UK economist at Berenberg, says that wages are now "the missing ingredient" for the government. Stronger earnings growth would increase tax receipts, but for now annual pay growth remains "marooned" below one per cent. Berenberg expects to see pay growth pick up over the second half of 2014, improving government borrowing figures.