May public borrowing falls more than expected
The budget deficit narrowed slightly more unexpectedly in May compared to a year earlier due to a rise in indirect taxes such as January’s increase in VAT, official data showed.
The Office for National Statistics said that public sector net borrowing fell last month to £15.156bn from £16.463bn in May 2010, just below economists’ average forecast in a Reuters poll of £15.75bn.
Chancellor George Osborne said: “The public finances data this morning show the government’s deficit reduction is on track,” he told parliament.
The coalition government of Conservatives and Liberal Democrats is one year into a five-year plan to largely eliminate the country’s budget deficit, which totalled more than 10 percent of GDP before they came into office in May 2010.
The government’s preferred measure, PSNB excluding financial sector interventions, fell to £17.415bn from £18.480bn.
Total cash receipts for the government were £33.597bn in May, up from 29.491 billion pounds a year earlier.
PSNB-ex since the start of the tax year in April now totals £27.404bn – £1.497bn more than at the same point in 2010, due to a one-off set of bank tax revenue received in April 2010.
The independent Office for Budget Responsibility forecasts that public borrowing excluding financial sector interventions will total 122 billion pounds during the current 2011/12 tax year.