Wednesday, 25 July 2012

UK public borrowing rises in June

Good news from the labour market this week raised hopes that the economy might not be as weak as the official figures have suggested. Today's public finances figures continue the puzzle.

Tax revenues in the first three months of the fiscal year are running 2.5% higher than last year, which is not something you would usually see in a flat or shrinking economy.

The monthly public finance figures are notoriously volatile. Part of the increase in borrowing seems also to be due to a change in the timing of spending this year, which has pushed up borrowing by local authorities even as borrowing and spending by central government has fallen.

But the figures are a reminder that the chancellor wrote his Budget when the prospects for the economy looked a lot brighter. The IMF warned this week that he might have to loosen his Budget plans if the economy did not pick up. Today's figures suggest that that weak growth may be forcing him to do that already.

So how come I am still out of work?

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