Worst April on record for UK public finances: reaction

Worst April on record for UK public finances: reaction

Analysts give their verdicts on official figures showing April was the worst on record for the public sector's borrowing.

The Chancellor is trying to shrink the state's borrowing, but the new fiscal year saw efforts get off to a shaky start. Photo: REX

11:27AM BST 24 May 2011

Comments

Hetal Mehta, UK economist at Daiwa Capital Markets:

"The public finances have got off to a pretty bad start this year, with borrowing higher than a year ago even though 'special factors' added £3.5bn to tax receipts this year. Once again, it seems that the government is struggling to rein in its expenditure.

"And given that economic growth is likely to be weaker than the Office for Budget Responsibility (OBR) expects, there is still a significant downside risk for tax revenues, making it more likely that the government will overshoot this year's borrowing projections."

Nida Ali, economic advisor to the Ernst & Young ITEM Club:

“These results have eroded some of head start in reducing borrowing that the government had gained at the end of the last fiscal year. Given that the worst of the pain is yet to come, the Chancellor’s target of reducing borrowing by £30bn in 2011/12 looks more stretching than ever, especially with economic growth looking likely to disappoint.”

Howard Archer, chief UK economist at IHS Global Insight:

"At face value, the April public finances were markedly worse than expected, representing a disappointing and worrying start to fiscal year 2011/12 for the Chancellor. However, the data do need to be treated with caution as the Treasury point out that there were distorting factors.

"Furthermore, it needs to be borne in mind that public finance data are notoriously erratic and subject to revision. Indeed, some better news for the Chancellor saw last year's Public Sector Net Borrowing Requirement (PSNBR) excluding financial interventions trimmed to £139.4bn from the previously reported £141.1bn."

Samuel Tombs, UK economist at Capital Economics:

"April's UK public finance figures got the new fiscal year off to a bad start. Given that borrowing for the 2011/12 fiscal year as a whole is projected to be £122bn this year, about 15pc below last year's actual figure, this is clearly bad news.

"Nonetheless, these are just one set of figures and the trend in borrowing should improve as more of the spending cuts kick in later this year."

David Kern, chief economist at the British Chambers of Commerce:

“The public finance figures for April mark a disappointing start to the new financial year, showing a higher than expected deficit. There are a number of special factors that might account for the large deficit, and we should not give too much weight to one figure. However, it is clear that the government’s plans to reduce the deficit by more than £20bn over the year will be a challenge."

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