Public borrowing figures were slightly better than expected today, on the most common measure of public sector net borrowing, looked better as this dropped from £12.6bn (revised from £16.7bn) to £8bn (release).
Ed Conway has outlined the several alternative measures of government borrowing, one of which has gone up:
PSNB: Public sector net borrowing – the traditional measure of the deficit. On this measure, the deficit is down this past financial year (12/13) by £19.1bn (or 20.5%) to £74.2bn.
PSNBx: Stripped of the effects of financial interventions (eg the semi-nationalisation of banks like RBS and HBOS) the deficit was £85.1bn – down by 29.6% on the previous year (last month the figures put the decrease at 28.7%).
PSNB ex RMPP: Strip out the impact of the Royal Mail Pension Plan, which has been added to the Government’s books, and the deficit was £113.1 – down by 6.5% (last month had it down by 5.6%)
PSNB ex RMPP and APF – stripping out the effect of the extra money funnelled into the public finances from the Bank of England’s Asset Purchase Facility (eg profits from quantitative easing): deficit of £119.5bn – down 1.2% on the previous year (was previously a mere 0.3% fall).
PSNB ex SLS – this is a variant of the deficit which, on top of all of the above excludes the influx of profits from the Special Liquidity Scheme. On this measure, the deficit was 900m higher in 2012/13 than the previous year (that is at least a smaller increase than the £2bn quoted last month).
So if you want to be partisan about the numbers, you can just point to the figure you prefer. Several people have already been doing this.
The money from the Special Liquidity Service has been transferred from the Bank of England to the Treasury, but it's possible that the Treasury will be paying the Bank back for its quantitative easing scheme in the future, so we could expect a big hit to public finances then.
Research last December suggested that transfer losses from the quantitative easing scheme could cost the UK £60-75bn (as the Treasury has assured the Bank of England that it will cover losses from the scheme) or even yield profits of up to £150bn. Our banking reporter Tim Wallace:
If the “Bank rate remains permanently at 0.5 per cent, and the Bank’s gilt portfolio is allowed to run off as each underlying bond matures, the final profit arising from QE will exceed £150bn,” said analysts.
“If, on the other hand, Bank rate rose sharply from 0.5 per cent to 6.5 per cent between 2015 and the end of 2017 and then stayed at the higher level, this profit would be transformed in the fullness of time into a loss approaching £75bn.”