"UK borrowing reaches five-year high for September at 20.2bn The size of the overshoot does seem to be narrowing, however, with September's deficit only 100m adrift of the OBR's expectations. Higher than expected inflation and wage growth should be helping to incease income tax receipts, as more workers are dragged into higher tax bands though the flipside is higher than expected payments on inflation-linked government bonds."
"There was some moderately helpful news in the detail of the data, too. The ONS had already pointed out that an error in VAT estimates had put its estimates for the deficit off course by 2bn for the year so far. Because of this and a higher estimate for other tax receipts only partly offset by higher than expected spending it now believes public sector net borrowing was 4.2bn lower than previously thought."
OBR five-year forecasts set the benchmark for assessing fiscal rules at the next budget. September public finances show a first-half fiscal deficit of 99.8bn, 7.2bn higher than the OBR's March forecast. The overshoot is narrowing, with September only 100m above expectations. Higher inflation and wage growth boost income tax receipts by moving workers into higher bands, while increasing payments on inflation-linked gilts. An ONS VAT estimate error reduced the projected deficit by about 2bn, and higher other tax receipts mean public sector net borrowing is now estimated 4.2bn lower. The current budget remains substantially negative, challenging plans to balance day-to-day spending with tax receipts.
Read at www.theguardian.com
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