Growth puts the UK on track to beat its budget deficit target

THE BUDGET deficit narrowed marginally during December this year, dropping by £2.1bn to £12.1bn, compared to the same month of 2012, suggesting that the Treasury may meet its target on public finances after many revisions.

Public borrowing for the financial year up to December hit £96.1bn, falling by almost five per cent compared to 2012-13’s £100.9bn.

The figure excludes temporary financial effects like transfers from the Bank of England’s programme of quantitative easing.

Central government receipts were £45.8bn in December, up £1.3bn on the previous year, including a £400m increase in stamp duty reflecting the recent pick-up in the property market, according to the official figures.

The figures are initial estimates from the ONS and still subject to later revision. But several analysts are now projecting that chancellor George Osborne will finally beat the year’s targets. Barclays economic researchers now expect that a lower amount will be borrowed by the Treasury this fiscal year, compared to a £111.2bn target from the Office for Budget Responsibility (OBR).

Projections for public borrowing have been repeatedly revised upwards, as economic growth and tax revenues fall short of the OBR’s expectations.

“The public purse is in a much healthier condition than this time last year, mainly through stronger growth boosting tax revenues. The OBR’s full-year forecast of £111.2bn always looked a little conservative and today’s figures confirm we are well on course to undershoot,” added Andrew Goodwin of EY’s Item Club.