UPDATE: UK 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 year-ago level. Recent data, however, seems to confirm that this

trend appears to have broken down, owing to the higher inflation, slower growth

environment. 

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

higher this financial year 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 stg0.5bn higher at stg0.9bn.

     Borrowing (excluding banks) is seen coming in as low as -stg2.2bn

(Barclays) and as high as stg1.5bn (Oxford Economics), with a standard deviation

of stg1.0bn from our sample of eleven forecasts.

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

                                 Jul               Jul

                    Public Finances-  Public Finances-

                                PSNB           PSNB ex

                              stg bn            stg bn

Date Out                      22-Aug            22-Aug

Median                         -0.40              0.90

Forecast High                    0.3               1.5

Forecast Low                    -2.8              -2.2

Standard Deviation               1.6               1.0

Count                              3                11

Prior                            6.3               6.9

Barclays                        -2.8              -2.2

Berenberg                        N/A               1.0

Capital Economics                N/A               0.2

HSBC                             N/A               1.4

Investec                        -0.4               0.2

Lloyds TSB                       0.3               0.9

Nomura                           N/A               1.0

Oxford Economics                 N/A               1.5

Pantheon                         N/A               0.0

RBC                              N/A               1.0

Societe Generale                 N/A               0.9

     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. Receipts, therefore, spilled over into August last year which will not

have been the case this year.

     July is also the month when firms typically pay the first of four

corporation tax instalment payments on their 2017 profits. The receipts will be

accrued back over the first three months of the financial year, as part of the

new way the ONS accounts for this data, so revisions to previous month's numbers

are also likely.

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

[TOPICS: MTABLE,M$B$$$,M$E$$$]