Public finance data, May 2016 - PwC comments

Published at 10:35 AM on 24 May 2016

Commenting on today's public finance data, PwC chief economist John Hawksworth said that reducing the budget deficit is likely to be a long, slow process:

“Latest estimates suggest public borrowing was £76 billion in the 2015/16 financial year – that’s up by £2 billion on last month's preliminary estimate and £3.8 billion higher than the OBR's March Budget forecast.

“Nonetheless, the deficit has still come down gradually, thanks to a rise of around 3% in central government receipts last year, while central government spending was broadly flat. But this was achieved partly by squeezing grants to local authorities, whose borrowing last year rose by £4 billion relative to the previous year.

“Meeting the OBR's forecast of getting the deficit down to £55.5 billion this financial year therefore already looks challenging, requiring a cut of over £20 billion relative to the latest estimated outturn for 2015/16.

“While not much can be read into a single month's figures, the April 2016 data only showed the deficit edging down slightly by £0.3 billion compared to a year earlier - a much more rapid rate of decline will be needed in the rest of the year if the Chancellor is to keep his deficit reduction plans on track.

“It is still possible that the Chancellor could meet his public borrowing targets if economic growth rebounds strongly after a vote to Remain on 23rd June - but it will be a challenge."

Ends.

For further information please contact Tilly Parke: [email protected] / +44 20 7804 8761


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