Deficit reduction appears to have gone into reverse - EY ITEM Club comments
21 June 2016
- Borrowing in May only marginally down on the levels seen a year earlier…
- …indicating that deficit reduction in 2016-17 has gone into reverse
Martin Beck, senior economic advisory to the EY ITEM Club, comments:
“Deficit reduction appears to have gone into reverse with revenue only achieving modest gains in May.
“Revenue from VAT increased at an annual rate of 1.9%, the weakest in 15 months, while income tax revenues saw an increase of 1.5%. Stamp duty on property purchases fell 5.5% after surging earlier in the year as buyers rushed to beat April’s tax rises. Meanwhile, central government spending increased by 2.2%.
“It is worth noting that the OBR’s March Budget forecast predicted a 23% drop in the deficit for the fiscal year as a whole. So, although early days, a sizeable improvement will be necessary in coming months to get that forecast back on track.”