Rolling coverage of the latest economic and financial news
- Introduction: UK borrowed £31.7bn last month - second highest April ever
- But borrowing was lower than a year ago, in first wave of pandemic
- Capital Economics: Tax rises and spending cuts may be avoided
- Test and trace, vaccines and furlough scheme lift borrowing
- UK national debt at highest since 1960s....
- ....but borrowing costs still low
The drop in UK borrowing in April shows that the chancellor will have more ‘room to manoeuvre’ than expected when drawing up the autumn budget, says Resolution Foundation, the think tank.
They point out that the priority is to deliver a ‘rapid recovery’, with low government borrowing costs meaning less pressure to tighten policy.
This months @ONS public finance data provides us with the first month of the FYE 2021-22.
Despite continued high levels of borrowing, today's data continue the run of better news on the public finances with borrowing much lower than the OBR forecast in March. Short thread… pic.twitter.com/PfpNQLF2JC
Debt to GDP in April was 98.5 per cent - the highest ratio since March 1962.
In March, the OBR had expected it to continue to rise to 107.4 per cent of GDP this year but that level now looks set to be lower. pic.twitter.com/pJKVTHqy0p
Better-than-forecast fiscal outturns mean the Chancellor has more room for manoeuvre in the Autumn.
First priority should be driving a rapid recovery which could well take more policy. For more on how to do that, see: https://t.co/ZxygVFqAFM
Ultimately tax will need to rise to repair the damage to the public finances. But the extent of any consolidation hinges on economic scarring.
There are risks on either side with the BoE estimates less than half the OBR's but the OBR tending to be too optimistic about deficits.
Either way, despite rising somewhat in recent months, yields remain low – so the Chancellor is not under immediate pressure to tighten policy.
All this means there should be room for him to do more at the Autumn Budget to drive a rapid recovery. pic.twitter.com/dYZixCFmAN
On the public finance figures, Chancellor of the Exchequer Rishi Sunak says:
“At the Budget, I set out the steps we are taking to keep the public finances on a sustainable footing by bringing debt under control over the medium term.
“But we also need to focus on driving a strong economy recovery from the pandemic. That is why the Government is continuing a comprehensive package of support to help businesses and workers get back on their feet - and the evidence shows that our Plan for Jobs is working.”
Related: Rishi Sunak flags tax rises in budget as total Covid spending tops £400bn
Related: Rishi Sunak digs in for battle against financial cost of Covid
Continue reading...from US news | The Guardian https://ift.tt/1Zwv3jN
