THE UK’S public deficit in 2013-14 dropped further than expected at the start of the fiscal year, according to yesterday’s official figures, but the improvement is being driven by increased tax revenues.
The public sector’s net borrowing in the last financial year was £107.7bn, down £7.5bn from the previous year, and just over £12bn lower than was forecast by the Office for Budget Responsibility (OBR) at the time of the 2013 Budget.
The rapid return of economic growth has spurred higher tax revenues, which have squeezed the deficit. Receipts were up 4.3 per cent on 2012-13, rising to £574.2bn. Spending actually grew too, rising 1.4 per cent to £640.2bn during the same period.
Stamp duty was a particularly supportive revenue for chancellor George Osborne during the year: receipts rose to £1.1bn in March, 44.5 per cent higher than in the previous year. Over the whole 12 month period, revenue from the house sale tax was up 37.2 per cent.
Barclays analysts noted that the discretionary spending cuts have been reduced in 2013-14 against what was planned in June 2010, and will also be reduced in 2014-15, increasing in the fiscal year following the next general election.
“We expect the chancellor to miss his public borrowing forecasts (as set out by the OBR) by a fairly wide margin in the long term,” warned Christopher Evans of the Centre for Economics and Business Research in a note yesterday.
The national debt now sits at over £1.268 trillion, rising to the equivalent of 75.8 per cent of GDP.