UK Analysis: Aug Borrowing Down On VAT; YTD At 2007 Low>

-UK August PSNBex Stg5.669 billion vs Stg6.920 billion August 2016

-UK Year-To-Date PSNBex -0.7% over 2016/17 to Stg28.3bn

-UK August net debt ex BoE 80.3% of GDP vs 80.8% in August 2016

By Laurie Laird and Jamie Satchithanantham

     London (MNI) - UK public borrowing fell sharply in August, courtesy 

of a jump in Value Added Tax receipts and a fall in interest payments, 

leaving year-to-date borrowing at its lowest level since 2007.  

     Excluding public sector banks, borrowing decreased to Stg5.669 

billion last month, from Stg6.920 billion in August of 2016, compared to 

the MNI median forecast of Stg7.3 billion. 

     That left net debt, excluding the Bank of England, at 80.3% of 

gross domestic product in August, down from 80.8% a year earlier. 

     Value Added Tax receipts rose by 5.6%, or Stg600 million, to 

Stg11.6 billion, the highest level for the month of August on record. 

     Debt interest outlays fell by Stg200 million to Stg4.6 billion, 

after two months of inflation-linked increases. The retail price index 

rose by a smaller annual rate in August when compared with the July 

increase, leading to the fall in government interest payments, according 

to a National Statistics official. 

     Corporate tax receipts slumped for the third straight month, 

declining by Stg100 million, or 2.7%, to Stg4.8 billion. The official 

was unable to provide a reason for the decline. 

     Year-to-date borrowing rose to Stg28.3 billion in August, a 0.7% 

decline over the same period of last year, and the lowest for the first 

five months of a fiscal year since 2007. 

     That follows a dramatic improvement in the government's finances 

over the 2016/17 financial year, although borrowing was revised upward 

to Stg45.6 billion from the Stg45.2 billion reported last month. 

     The central government net cash requirement fell to Stg985 million 

in August, from St3.696 billion a year earlier, leaving the year-to-date 

CGNR at Stg5.8 billion, the lowest since 2002. CGNR has been kept in 

check by the Bradford and Bingley mortgage sale, and by the absence of 

fundraising linked to index-linked gilt redemptions. The government was 

forced to raise cash to cover redemptions in August of 2016. 

     The current budget deficit fell to Stg2.232 billion in August, 

compared to Stg4.326 billion a year earlier. 

     Including public sector banks, the public sector borrowing declined 

to Stg5.093 billion in August, from Stg6.344 billion a year earlier. 

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

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