UK public sector net borrowing is on course to undershoot the Office for Budget Responsibility’s £49.9 billion forecast for 2017-18, partly reflecting resilient tax receipts – consistent with the assessment here that economic growth is holding up.
12-month rolling borrowing fell to £39.4 billion in December, the lowest since January 2008 – see first chart. The December number was flattered by a one-off £1.2 billion credit from the EU, and the OBR expects self-assessment tax receipts over the remainder of 2017-18 to be significantly weaker than a year earlier – such receipts are forecast to fall by £3.1 billion for the year as a whole. Even so, the OBR appears to have been much too pessimistic about borrowing prospects in its November assessment – again.
Central government taxes and national insurance contributions rose by 4.2% in the first nine months of 2017-18 from a year before versus the OBR’s forecast of a 2.8% full-year increase – likely to be overshot even incorporating the projected decline in self-assessment receipts. Year-on-year growth of taxes and NICs has moved sideways since spring 2017, suggesting stable nominal GDP expansion – second chart.
