Public sector borrowing at £14bn in June

Julian Harris
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RISING government spending saw public borrowing hit £14bn last month, official figures unveiled yesterday showed.

Public sector net borrowing (PSNB) was up £300m from the same time last year, and “about £1.5bn above market expectations”, according to the Office for Budget Responsibility (OBR).

Central government spending was £51.96bn in June – up from £49.54bn in June 2010. Total debt now totals £944.3bn, up by over £140bn from a year ago.

“This is certainly not a step in the right direction,” said Nida Ali of the Ernst & Young Item Club.

“The government still has a very long way to go in order to meet its target of reducing borrowing by £20bn this year. With nine months to go it needs to reduce borrowing by more than £2bn a month compared with last year’s figures.”

Yet there was some relief for chancellor George Osborne in positive revisions to the data. “PSNB (ex-interventions) was revised down by £0.2bn for May, £1.2bn for April and by a cumulative £1.1bn for 2010-11,” explained Nomura’s Philip Rush.

And retail sales came in above expectations, with the value of sales rising four per cent annualised in June and the volume of sales up 0.4 per cent.

The last three months saw a 0.6 per cent rise in the sales by value, and a 0.2 per cent increase by volume.

Meanwhile, mortgage lenders expect home loan approvals to hold steady in the coming months and some see a risk of more people losing their homes this year, a Bank of England survey showed yesterday.

“The major UK lenders expected approvals for house purchase to remain at current levels over the coming months,” the Trends in Lending report said. “Some major UK lenders noted upside risks to arrears.”