Borrowing hit by EU payment but January could prove vital

Chris Papadopoullos
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Chancellor of the Exchequer George Osborne
A £2.9bn payment to the EU pushed the Treasury’s December borrowing higher than last year, official figures show.

However, the sum has yet to be paid as the government’s accountants record payments when they are incurred as opposed to when they are actually paid.

The total amount borrowed in December was £13.1bn. This was £2.9bn more than December 2013.

From April to December, public sector borrowing excluding public sector banks was £86.3bn – a saving of £0.1bn from the same period one year earlier.

One element of good news for the public finances was that revenues from income tax were up 3.1 per cent year-on-year and corporation tax was up 12.1 per cent.

Public borrowing may get a boost in January from self-assessment tax receipts, with tax changes last April causing people to defer income to this year to save money.

“The government is banking on a flood of self-assessment tax receipts relating to income earned in the fiscal year ending last April, to improve the borrowing picture markedly,” said economist Rob Wood from Berenberg investment bank.

Wood also said January’s figure will initially be uncertain as some self-assessment tax receipts are paid too late for the number crunchers to count the data and will probably be revised later.

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