FEBRUARY’S public finance figures made easier reading for chancellor George Osborne yesterday, coming in better than 2012 even after stripping out one-off changes.
The government borrowed £2.9bn less in the 10 months up to and including February than it did in the year before, even with the effect of transferring the Bank of England’s quantitative easing (QE) profits and the assets of the Royal Mail pension plan to its balance sheet removed.
The official public sector net borrowing number for the financial year to February, excluding bank bailouts, was £66.9bn, down £37.3bn on the same 10-month period of the 2011-12 fiscal year.
But this upbeat figure included the £28bn boost to the government’s balance sheet from adding the Royal Mail pension plan to its books, as well as a £6.4bn injection from clawing in the Bank’s profits from QE.
Capital Economics economist Vicky Redwood warned: “The big picture is that, with the economy struggling, progress in reducing the deficit has stalled.”
However, a new survey from the Confederation of British Industry (CBI) suggested that the economy might be on its way to slightly better times.
Though a margin of 15 per cent of firms said order books were below normal, giving a balance of minus 15, this is actually better than the series’ long term average of minus 17.
And a margin of three per cent of surveyed companied said their output had grown over the past three months, especially in the three largest sectors – food, drink and tobacco, chemicals, and motor vehicles and transport equipment.
On top of that, a balance of 22 per cent of firms said they expected output to grow in the next three months.