Hammond gets budget boost as borrowing falls to lowest level since 2007

21 Octobre, 2018, 19:25 | Auteur: Auguste Feret
  • Chancellor of the Exchequer Philip Hammond

Economists had expected a September borrowing figure of £4.5bn.

United Kingdom public sector borrowing fell to an 11-year September low of £4.1 billion, which is 800 million less than in the same month a year prior, according to the Office of National Statistics (ONS). A Reuters poll of economists had pointed to a reading of 4.5 billion pounds.

But net debt excluding public sector banks - the UK's total sum of borrowing - now stands at £1.8 trillion, or 84.3 per cent of GDP, said the ONS. London and Brussels have yet to strike a divorce agreement.

According to the Office for National Statistics, a small drop in corporation tax receipts and a decline in stamp duty on the sale of homes was offset by a rise in income tax payments and VAT receipts, driven by the World Cup and summer high street spending.

The deficit stood at 9.9 percent of GDP when Hammond's predecessor, George Osborne, took over as finance minister in 2010 and started a multi-year program of public spending cuts.

"This borrowing undershoot should give the Chancellor a little extra wiggle room for his Budget, but it will not be enough on its own to cover the cost of announced increases in spending on the NHS, let alone other priority areas where there is pressure to bring austerity to an end".

This made it likely that the Budget would be a "holding statement", he said, with more decisive measures delayed until next year.

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The OBR has estimated that Brexit will be a net drain on Britain's public finances, not a benefit.

The Office for Budget Responsibility (OBR), the Treasury's independent forecaster, has predicted a full-year borrowing requirement down by just 7% compared with last year.

"Real-terms increases in NHS spending mean other departments will have to endure further cuts, but Mr Hammond needn't intensify them".

Public debt stood at £1.79tn in September or 84.3% of gross domestic product, down from 86.7% in the same month a year ago, but double its level before the financial crisis.

Excluding quantitative easing, debt stood at 75.3 per cent of GDP at the end of September, £38bn lower than it was this time a year ago.

That is £3.4bn higher than a year earlier, but lower as a percentage of GDP than in 2017, when it was 86.7%. It is not a solicitation to make any exchange in commodities, securities or other financial instruments.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

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