MNI DATA IMPACT: UK Borrowing Up; Set To Beat OBR Y/Y Fcast

UK borrowing rose rose sharply between January and February, despite an increase in self-assessment tax receipts, but borrowing is on track to fall short of OBR forecasts for the full fiscal year, data released on Friday by the Office for National Statistics showed.

Borrowing rose to GBP19.147 billion in February, but a healthy increase in self-assessment tax receipts limited borrowing to the third-lowest monthly total since the pandemic began. That takes debt to 97.5% of gross domestic product, up from 97.1% in January, but below the originally-reported ratios of over 100% late last year, which were subsequently revised.

Self assessment tax receipts increased by GBP900 million compared with February 2020, taking the January/February total GBP2.3 billion above the same period of last year. Over the year to date, self-assessment receipts are down by GBP1.1 billion over 2020, after particularly weak interim returns in July.

Year-to-date borrowing rose to GBP278.8 billion, some five times more than in 2020, but borrowing is on track to meet the OBR's full-year like-for-like forecast of GBR327.4 billion. The headline OBR figure of GBR355 billion published earlier this month includes GBP27.2 billion in covid-related loan write-offs that are not yet reflected in ONS figures.

That means borrowing could rise to GBR48.6 billion in March — exceeding borrowing in any month since the pandemic began — and still meet the OBR target.

January borrowing was revised down to GBP3.128 billion from the originally-reported GBP8.750 billion, continuing a trend of hefty downward revisions in subsequent iterations of borrowing. Those revisions tend to reflect small-than-expected government outlays, according to a national statistician.

Customs revenues on EU imports rose to GBP320 million in February from GBP252 million in January. Borrowing was also flattered by the retention of approximately GBP1 billion in EU budgetary payments included in year-ago figures.