Government is closer to meeting the OBR's forecast - ITEM Club comments on public sector finances

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Nida Ali, economic advisor to the EY ITEM Club, comments on today’s public sector finances figures:

  • Public sector finances figures finally provide some good news for the Chancellor
  • But on the downside revenue growth in the financial year-to-date remains well below the OBR's full year forecast
  • In light of today's figures, the OBR may be able to avoid revising their borrowing forecast for 2012/13 upwards in December's Autumn Statement

“Finally some good news for the Chancellor. Although borrowing in September is only slightly lower than last year, chunky downward revisions to previous months have meant that the Government is a lot closer to meeting the OBR's forecast for 2012/13 than what was reported last month.

“The downward revisions to Government spending in previous months are particularly encouraging. But it is disappointing that revenue growth at just 0.8% in the financial year-to-date, compared to the same period a year earlier, is still very slow and well below the OBR's full year forecast of growth of 3.7%.

“We have one more month of data left before the Autumn Statement in December. If that remains fairly neutral, the OBR is now likely to leave its public finances forecasts unchanged from March's budget. Running around £6bn behind the current budget measure, borrowing on average needs to fall by about £1bn a month for the rest of the year which in our view remains within the realm of possibilities.”