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MNI DATA IMPACT: UK Borrowing Exceeds OBR F'cast, Worse Ahead

MNI (London)
By Laurie Laird
     LONDON (MNI) - UK public sector borrowing rose sharply in the 2019/20
fiscal year, topping the Office for Budget Responsibility's target, but
statisticians at the Office for National Statistics warn that the economic shock
caused by the Covid-19 virus could lead to heavy revisions in months to come.
     The following are the main points from the March public borrowing report
released on Thursday by the ONS.
     - Borrowing rose by 23.7% to GBP48.7 billion in the latest financial year,
exceeding the target of GBP47.4 billion set by the Office for Budget
Responsibility in March. That took borrowing to 71.9% of GDP, down from 72.3% at
the end of 2018/19.
     - However, 2019/20 borrowing data are subject to heavy Covid-related
revisions, according to the ONS, even though lock-down orders and business
closures came in the closing weeks of the financial year. PAYE, VAT and
corporate tax receipts included in the March release are partially based on
estimates, and the ONS has yet to adjust those categories for the impact of the
     - VAT receipts barely increased in March, taking VAT to GBP154.5 billion in
the financial year, up 2.0% over 2018/19, the smallest increase since the depths
of the financial crisis in 2009/10. VAT receipts for the financial year just
ended assumed that payments deferred under government schemes will be submitted
at a later date, but a national statistician admitted that businesses taking the
VAT holiday could eventually fail, compromising the estimates underlying VAT
calculations included in Thursday's release.
     - Corporate tax receipts slipped by 2.2% to GBP56.6 billion in the latest
fiscal year, the biggest fall since 2011/12. The decline could be revised
downward in later iterations of public borrowing estimates, according to ONS
     - Government outlays aside from interest and social payments surged by
13.3% in March over the same month a year earlier, the largest increase on
record, inflated by a GBP4.2 billion disbursement to local governments related
to Covid-19. In the same category, government spending on goods and services
increased by 4.3% in the year to March, while staff costs, including NHS
workers, increased by 8.4%.
     - While the ONS highlighted the likely downward revisions to tax receipts,
officials also stressed that the OBR's forecast of public sector net debt, at
79.5% for 2019/20, is based on dated estimates of GDP, which are likely to be
revised sharply downward, raising later calculations of debt as a percentage of
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: MABDS$,M$B$$$,M$E$$$]
MNI London Bureau | +44 203-865-3812 |

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