The ONS figures showed that net borrowing, excluding state-owned banks, was £9.7bn in May this year, down from £10.1bn in May 2015. The ONS also revised its forecast for the full year to £74.9bn.
Although the additional net borrowing is reducing, the total amount of debt is continuing to rise. Public sector net debt is £1.61 trillion, 84% of GDP. Chancellor George Osborne reiterated in March that the UK was still on track to return a budget surplus by 2020 (1).
Scott Bowman, UK Economist at Capital Economics, said: “We should take the figures for the first few months of the fiscal year with a pinch of salt, as they are often revised because they are largely based on forecast data.
“And, if the UK votes to remain in the EU, then growth should rebound in the second half of this year, paving the way for a more rapid improvement in the public finances. Nonetheless, the big picture is that the Chancellor has a long way to go in order to meet his fiscal forecasts” (2).
The figure of £9.7bn for May is slightly above economists’ forecast of £9.5bn, as the effects of a slowing economy and concerns regarding the EU referendum have impacted growth (3).
Samuel Tombs of Pantheon Macroeconomics said that this “mainly reflects weaker year-over-year growth in tax receipts”, and believes that George Osborne “only has a slim chance of meeting his budget surplus goal” (4).
- (1) – UK government borrowing falls slightly in May – BBC News
- (2) – UK Government borrowing higher than expected in May – Financial Times
- (3) – Government borrowing drives Osborne off course – Evening Standard
- (4) – UK public borrowing slightly bigger than forecast last month, but best May since 2007 – Reuters