Government borrowing rises by £500m
Filed under: News
Public sector net borrowing, excluding distortions such as bank bailouts and quantitative easing (QE) cash transfers, increased in June to £12.4 billion from £11.9 billion a year earlier, the Office for National Statistics (ONS) said.
However, including a £3.9 billion transfer of QE cash from the Bank of England's asset-buying drive, June's deficit fell by £3.4 billion year-on-year to £8.5 billion.
The ONS also cast doubt on how much money the Government will claw back from Swiss bank accounts, knocking May's £3.2 billion estimate to just £342 million in actual receipts.
There was some cheer for the Government as a further revision showed annual underlying public sector net borrowing fell by £2.1 billion in the last financial year, reversing last month's upward revision.
May's borrowing figures were flattered by the £3.2 billion estimate of Swiss taxes, but the ONS said it is taking a "more cautious approach" on how much tax it will be able to recoup from Swiss accounts after fresh information from the Swiss Bankers Association. It will now only record the Swiss cash when it is received. The Government struck a deal in January with Swiss authorities to recoup tax from UK residents' bank accounts in the country.
Higher local government borrowing in June offset a 15.2% increase in tax receipts from businesses and households to drive the underlying monthly deficit higher.
The ONS revised the underlying deficit for the year to the end of March 2013 lower by £2.3 billion to £116.5 billion due to higher tax receipts. That meant the 2012/13 deficit was £2.1 billion lower than in 2011/12, reversing last month's £300 million upward revision to the annual result.
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."
Labour Treasury spokesman Chris Leslie said: "These disappointing figures show that our stalled economy has led to deficit reduction grinding to a halt. Underlying borrowing rose last month and it was exactly the same in the first three months of this year as it was in the same period last year."