UK Preliminary Data Forecasts: July Public Sector Finances

By Jamie Satchithanantham

     LONDON (MNI) - Since early 2015, UK government monthly borrowing has

followed a downward trend, with each month's borrowing figures coming in below

its respective level set a year ago. Recent data seems to confirm that this

trend appears broken down, amid higher inflation and slower growth.

     Consistent with this, the OBR forecasts borrowing to come in stg10.2 higher

in 2017/18 than in 2016/17.     

     In June, borrowing was stg2.0bn higher than in June 2016, the largest

annual increase for over three years, courtesy of higher central government

spending (covering payments made by the UK to the EU) and highest interest debt

payments on indexed-linked bonds.  

     July, traditionally a key a month boosted by self-assessment and

corporation tax receipts, will see borrowing recede from the levels seen in the

last few months but remains in line to come in worse than July 2016. Borrowing

last July was stg0.4bn and the median of our analysts' forecasts places this

July's borrowing figure stg0.8bn higher at stg1.2bn.

------------------------------------

                                 Jul

                    Public Finances-

                             PSNB ex

                              stg bn

Date Out                      22-Aug

Median                           1.2

Forecast High                    1.5

Forecast Low                     0.2

Standard Deviation               0.6

Count                              4

Prior                            6.9

HSBC                             1.4

Investec                         0.2

Oxford Economics                 1.5

RBC                              1.0

     There are a couple of things observers should be aware of concerning July's

data.

     The self-assessment receipts paid this July will be boosted by calendar

effects. July 31 fell on a Sunday in 2016 unlike this year when it fell on a

Monday. As such, receipts spilled over into August last year meaning the figures

will likely flatter this July's numbers.

     Corporation tax is typically paid in July but given the new method the ONS

now processes data the associated revenues will be accrued back over the first

three months of the financial year. 

     This survey will be updated Aug 21.

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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