MNI DATA ANALYSIS: May Borrowing Down; FY 2017/18 Revised Lower>

-UK May borrowing Stg4.966bn vs Stg6.966bn May 2017

-UK 2017/18 FY Borrowing to Stg39.5 billion from Stg40.5bn previous

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - UK public borrowing dropped precipitously in May, 

while borrowing over the last fiscal year was revised lower, but the 

downward trend of recent months could soon come to an abrupt halt, with 

the government poised to increase funding to the National Health 

Service. 

     May borrowing, excluding the Bank of England, slid to Stg4.966 

billion, well below the MNI median forecast of Stg6.0 billion, down from 

Stg6.966 billion a year earlier. 

     Net debt fell to 75.8% of gross domestic product in May, from 78.9% 

in the same month of 2017. 

     Value-Added-Tax receipts increased by 5.4% in Stg11.5 billion last 

month, with those revenues based on tax forecasts constructed by Her 

Majesty's Revenue and Customs Service. 

     Income and capital gain taxes jumped by 7.5%, the biggest jump 

since 2014/2015, to Stg12.5 billion, a record high for the month of May. 

A National Statistics official could provide no explanation for the 

surge in income tax receipts. 

     The so-called sugar tax on manufacturers of sugary drinks continues 

to reap only modest benefits for public purse. The government raised 

just Stg13 million in May, matching the April take, suggesting full-year 

revenues could fall far short of the Stg240 million envisioned by 

Treasury officials. 

     Over the 2017/18 fiscal year, borrowing was revised downward to 

Stg39.451 billion, down from the Stg40.5 billion reported last month and 

the Stg42.6 billion recorded in April. 

     That represents a 13.6% fall over the previous fiscal year to the 

lowest full-year level since 2006/07 and brings borrowing below the 

target set by the Office for Budget Responsibility of Stg45.2 billion. 

     A stg1.5 billion decline in capital spending accounted for much of 

the downward revision in full-year borrowing, while government receipts 

were slightly lower than originally reported. 

     However, the budget surplus over the fiscal year ended in April was 

revised downward, to Stg1.2 billion from the Stg1.3 billion reported 

last month. That's still the first fiscal year surplus since the 2001/02 

financial year. 

     However, 2017/18 could represent a low-water mark in borrowing, 

with the government appearing to loosen the purse strings after years of 

austerity. Last week, Prime Minister Theresa May announced increased 

funding for the National Health Service, lifting its budget by Stg20 

billion by 2023, from Stg114 billion currently. 

     Officials have hinted that some, but not all, of the increase will 

be funded through taxation, suggesting an expansion of public borrowing 

over the coming years. Chancellor of the Exchequer Philip Hammond may 

provide clues as to the government's stance on increased borrowing at 

tonight's Mansion House speech. 

     The central government net cash requirement fell to Stg7.276 

billion in May, from Stg9.834 billion a year earlier. 

     The current budget deficit rose fell to Stg3.437 billion last 

month, from Stg4.397 billion a year earlier.    

     Including the Bank of England, public sector borrowing declined to 

Stg3.356 billion in May from Stg5.355 billion last year. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]