Public borrowing figures - PwC comments

Published at 10:26 AM on 21 October 2016

In response to the latest public borrowing figures, John Hawksworth, chief economist at PwC, commented:

"Today's public borrowing figures were a bit of a cold shower for the Chancellor after the recent run of generally favourable post-referendum economic data.

"Public borrowing in the first half of this financial year is estimated at £45.5 billion, just £2.3 billion lower than the same period last year. In September alone, borrowing was £1.3 billion higher than a year earlier and the estimated deficit for the previous five months was also revised up by £1.1 billion.

"It is therefore looking increasingly difficult for the Chancellor to meet the OBR forecast from March that total public borrowing in 2016/17 will be £55.5 billion, which would require borrowing in the second half of the year to come in at just £10 billion. A more likely outcome based on the available data is that the budget deficit this year will come in at around £65-70 billion.

"We would not, however, expect the Chancellor to take any immediate action in the Autumn Statement to correct this budget deficit overshoot, as this could be counterproductive and further weaken the economy. Instead we would expect some increase in planned public sector investment over the next few years, allied to a commitment to eliminate the current budget deficit (excluding net investment) before 2020 and to keep the ratio of public sector debt to GDP on a gradual downward path in the medium term."


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