Posted: 24/01/17 by PwC LLP
Financial experts at PwC have published their reaction to today’s public finance data.
PwC chief economist John Hawksworth said: “Today’s public borrowing data contained some good news for the Chancellor, with downward revisions to previous estimates meaning that the budget deficit looks likely to be slightly smaller this year than the OBR projected back in November. But it is still likely to be significantly higher than the OBR predicted last March, before the Brexit vote.
“For December alone, public borrowing was only slightly lower than a year earlier, but the more significant change was a downward revision of £2.6 billion in estimated public borrowing between April and November 2016. This means that cumulative borrowing up to December is now estimated to be over £10 billion less than the same period a year earlier, and suggests an outturn for the full 2016/17 financial year of around £64-65 billion, as compared to the OBR’s November forecast of £68.2 billion. However, this slightly lower outcome would still be well above the OBR’s previous forecast of a £55.5 billion deficit at the time of the March Budget.
“The detailed figures show strong growth in the financial year to date in national insurance contributions and corporation tax receipts, but less strong growth in income tax receipts. However, January is always a bumper month for income tax inflows because of the self-assessment timetable, so we will get a better idea of the underlying trend after that.
“Overall, the somewhat better outlook for the public finances is consistent with the slightly better than expected performance of the economy as a whole since the EU referendum in June. But the budget deficit remains uncomfortably high, so this will not give the Chancellor much additional room for manoeuvre in his Budget on 8th March.”