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UK government borrowing rises in June UK government borrowing rises in June
(2 months later)
George Osborne's debt-busting plans were dealt a blow on Friday when figures showed underlying government borrowing rose by £500m in June.George Osborne's debt-busting plans were dealt a blow on Friday when figures showed underlying government borrowing rose by £500m in June.
Public sector net borrowing, excluding distortions such as bank bailouts and quantitative easing (QE) cash transfers, increased in June to £12.4bn from £11.9bn in June last year, the Office for National Statistics said.Public sector net borrowing, excluding distortions such as bank bailouts and quantitative easing (QE) cash transfers, increased in June to £12.4bn from £11.9bn in June last year, the Office for National Statistics said.
Including a £3.9bn transfer of QE cash from the Bank of England's asset-buying drive, June's deficit fell by £3.4bn year-on-year to £8.5bn.Including a £3.9bn transfer of QE cash from the Bank of England's asset-buying drive, June's deficit fell by £3.4bn year-on-year to £8.5bn.
The ONS cast doubt on how much the government will claw back from Swiss bank accounts, knocking May's £3.2bn estimate to £342m in actual receipts.The ONS cast doubt on how much the government will claw back from Swiss bank accounts, knocking May's £3.2bn estimate to £342m in actual receipts.
There was some cheer for the government as the underlying deficit for the year to the end of March 2013 was revised down by £2.3bn to £116.5bn thanks to higher tax receipts. That meant the 2012/13 deficit was £2.1bn lower than in 2011/12, reversing last month's £300m upward revision to the annual result.There was some cheer for the government as the underlying deficit for the year to the end of March 2013 was revised down by £2.3bn to £116.5bn thanks to higher tax receipts. That meant the 2012/13 deficit was £2.1bn lower than in 2011/12, reversing last month's £300m upward revision to the annual result.
May's borrowing figures were flattered by the £3.2bn estimate of Swiss taxes, but the ONS said it is taking a "more cautious approach" on how much tax will be recouped from Swiss accounts after fresh information from the Swiss Bankers Association. The government struck a deal in January with Swiss authorities to recoup tax from UK residents' bank accounts in the country. The ONS will now record the Swiss cash only when it is received.May's borrowing figures were flattered by the £3.2bn estimate of Swiss taxes, but the ONS said it is taking a "more cautious approach" on how much tax will be recouped from Swiss accounts after fresh information from the Swiss Bankers Association. The government struck a deal in January with Swiss authorities to recoup tax from UK residents' bank accounts in the country. The ONS will now record the Swiss cash only when it is received.
Higher local government borrowing in June offset a 15% increase in tax receipts from businesses and households to drive the underlying monthly deficit higher. The ONS said figures are likely to be revised as more data is received from councils.Higher local government borrowing in June offset a 15% increase in tax receipts from businesses and households to drive the underlying monthly deficit higher. The ONS said figures are likely to be revised as more data is received from councils.
A Treasury spokesman said: "The government is taking tough decisions to deal with the deficit: today's data shows that borrowing fell last year. And while we can and will take nothing for granted, the economy is moving from rescue to recovery: the economy is growing; the deficit and unemployment are falling."A Treasury spokesman said: "The government is taking tough decisions to deal with the deficit: today's data shows that borrowing fell last year. And while we can and will take nothing for granted, the economy is moving from rescue to recovery: the economy is growing; the deficit and unemployment are falling."
The independent Office for Budget Responsibility (OBR), set up to monitor the state's finances, expects the deficit to come in at around £120bn this financial year – which would mark an increase on 2012/13.The independent Office for Budget Responsibility (OBR), set up to monitor the state's finances, expects the deficit to come in at around £120bn this financial year – which would mark an increase on 2012/13.
James Knightley, economist at ING Bank, said while borrowing was "not quite as good as hoped for", the numbers suggest the government's full-year forecast remains on track.James Knightley, economist at ING Bank, said while borrowing was "not quite as good as hoped for", the numbers suggest the government's full-year forecast remains on track.
He added: "With economic activity starting to show some positive signs and with employment continuing to grow we would not be surprised to see the full year borrowing figure creeping below this forecast."He added: "With economic activity starting to show some positive signs and with employment continuing to grow we would not be surprised to see the full year borrowing figure creeping below this forecast."
But Martin Beck, UK economist at consultancy Capital Economics, said the UK's public finances remain a "long way from health". He said: "While other indicators are pointing to signs of life in the UK economy, the public finances have yet to see much of a boost from the nascent upturn."But Martin Beck, UK economist at consultancy Capital Economics, said the UK's public finances remain a "long way from health". He said: "While other indicators are pointing to signs of life in the UK economy, the public finances have yet to see much of a boost from the nascent upturn."
The OBR gave a warning over the government's overstretched finances this week, saying Britain's ageing population and strained healthcare system means an extra £19bn of spending cuts or tax rises are needed to combat "unsustainable" pressure on its coffers.The OBR gave a warning over the government's overstretched finances this week, saying Britain's ageing population and strained healthcare system means an extra £19bn of spending cuts or tax rises are needed to combat "unsustainable" pressure on its coffers.
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