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Public finance bulletin: March 2012
Yesterday the Office for National Statistics and HM Treasury published Public Sector Finances February 2012. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first eleven months of financial year 2011−12.
Rowena Crawford, a Research Economist at the IFS said:
“As the Chancellor puts the finishing touches on his Budget speech he will doubtless be disappointed by today’s public finance figures. A month ago official figures suggested that tax revenues were growing less quickly than had been forecast by the OBR for the year as a whole but this was more than offset by lower-than-forecast growth in spending. However, today’s figures (which the Chancellor will have seen yesterday) show that in February there was a fall in receipts of taxes on incomes, and a sharp rise in spending on welfare benefits and central government spending on the administration and delivery of public services, relative to the same month last year. This has weakened the picture for the year but leaves borrowing over the first eleven months of 2011−12 running in line with the OBR’s November forecast for the year as a whole of £127 billion, rather than below as it appeared to be a month ago. The latest OBR forecasts will be published this afternoon. More important for the Chancellor than projected borrowing this year is whether the OBR judges that the medium term outlook for public finances has changed significantly.”
Central government current receipts in February were 2.7% lower than in the same month last year. The Office for Budget Responsibility’s (OBR) latest Economic and Fiscal Outlook, published in November 2011, forecast an increase in receipts relative to last year’s levels of 5.0% for the year as a whole and of 5.8% for the period from November 2011 to March 2012. The latest figures show an increase relative to last year’s level of 3.9% for the year to date, with a 3.0% increase between November 2011 and February 2012 compared to the same four months last year.
Central government current spending in February was 8.3% higher than in the same month last year. The latest figures show an increase relative to last year’s level of 1.8% for the year to date, with an increase of 1.5% between November 2011 and February 2012 compared to the same four months of 2010−11. The OBR’s latest forecast implies an increase relative to last year’s level of 3.2% for the year as a whole and of 4.8% for the period from November 2011 to March 2012.
Public sector net investment in February was £4.1bn, £0.4bn lower than was spent in February 2011. Public sector net investment between April 2011 and February 2012 was £22.0bn, which is 28% lower than in the same eleven months of 2010−11. The OBR’s latest forecast was that net investment in 2011–12 would be £28.6bn, which is 25% below last year’s level.