There are enough variations of today's public borrowing figures that you can twist them to fit almost any narrative you'd like. But can chancellor George Osborne really say that the deficit is shrinking? We've got some analyst reaction.
Martin Beck, UK economist, Capital Economics:
The public finances have yet to see much of a boost from the nascent upturn. Headline borrowing of £8.5bn in June was flattered by £3.9bn of receipts from the APF. Excluding these transfers, June’s deficit of £12.4bn was £0.5bn above the £11.9bn borrowed in the same month last year.
Admittedly, there was some good news. Borrowing in 2012/13 ex-APF and Royal Mail transfers was revised down to £116.5bn, £2.1bn lower than in the previous fiscal year. But the Chancellor will be disappointed to learn that the £3.2bn expected from the Swiss tax deal, and accrued in full in May’s borrowing figure, has been revised down to a mere £342m. In all then, beneath all the temporary distortions, the public finances remain a long way from health.
Howard Archer, chief UK and European economist, IHS Global Insight:
Trying to determine the underlying performance of the UK public finances at the moment is like looking for a needle in a haystack at the moment with all the distortions that have affected the performance in 2012/13 and early on in 2013/14.
Peering through the fog caused by the various distortions, the underlying public finances appear to be essentially on track after the first three months of fiscal 2013/14 (April-June) to meet the government’s targets.
The government is aiming for the PSNBR excluding the various distortions to come in at £120 billion in 2013/14 (compared to the now reported actual 2012/13 outturn of £116.5 billion). Given that the actual shortfall for the first three months of 2013/14 was unchanged from 2012/13 at £35.9 billion, the Chancellor currently seems well set to achieve his goal.
Certainly, the Chancellor will be fervently hoping that the economy can extend and build on its recent signs of improvement. If it can, it will not only increase the chances of beating the fiscal targets for 2013/14 but make it easier for the Chancellor to rebut any further calls for an easing up in the pace of fiscal austerity.