Yael Selfin, Chief Economist at KPMG UK, comments on today’s public sector finances data
“October’s data paints a difficult picture for the Chancellor, with cumulative public sector net borrowing estimated to already stand at £26.7 billion, higher than the £25.5 billion total borrowing the OBR expected for the full fiscal year.
“Higher VAT receipts as well as higher takings from income tax and tobacco duties helped boost government coffers, offset by a smaller earnings transfer from the Bank of England. Government spending was up primarily on day to day expenditure, including social benefits, while the rise in net investment was smaller, albeit from a lower base.
“Given past spending patterns, we now expect total borrowing for the full fiscal year of 2018-19 to come to £28.1 billion, or £2.6 billion above the OBR October forecast. This increase in the deficit eats into the projected room that the Chancellor saved in case of a damaging Brexit outcome, which we estimate is now diminished to £12.8 billion.”
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