BUOYED by taking on assets from the Royal Mail’s pension plan, the government has managed to reduce public sector borrowing from £93.3bn in 2011-12, to £74.2bn in 2012-13, a 20.5 per cent decline.
The impact of payments made by the Bank of England to the Treasury in April 2012 because of the end of the special liquidity scheme made borrowing seem particularly low in April 2012. After these effects are removed, net borrowing is £1bn lower at £10.2bn in April 2013 than it was in the same month last year.
Howard Archer, chief economist for IHS global insight suggested that consolidation at this pace was good news for the Treasury. “It looks increasingly likely that chancellor George Osborne will meet his fiscal targets for 2013/14 and could even beat them”, he added.
Government receipts, made up of taxes and other income were 8.5 per cent higher in April 2013 than April 2012, rising from £44.9bn to £48.7bn, despite the rising personal allowance for income tax and the fall of the top rate of income tax to 45 per cent in that month.
Expenditure also rose over the year, even when excluding debt interest payments. Spending was £570.6bn throughout 2011-12, increasing to £582.6bn over the 2012-13 financial year.