- Government borrowed £14.9 billion in October – £4.4 billion more than the previous October
- Tax take up by £2.7 billion compared to last year
- Spending still £5.5 billion more than OBR forecast for the month of October
- Public sector net borrowing £16.9 billion less than OBR forecast for seven months to October
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK public sector finances:
“The latest set of public sector finances just demonstrates what a tricky position the chancellor is in as he polishes up those lines ahead of tomorrow’s Autumn Statement.
“Tax cuts of some form or other have been pretty much nailed on by his boss in No. 10 but perversely it’s the increased tax take that’s played a big part in giving Jeremey Hunt that bit of extra headroom that could allow him to pull this particular rabbit from his hat.
“The sleight of hand that is fiscal drag has pulled more and more people into paying tax for the first time, as well as more middle earners into the higher tax bracket.
“But even with government receipts up by more than £2.5 billion compared to the same period a year ago and considerably higher than the OBR forecast back in March, the sums still aren’t adding up.
“The government is still spending more than it’s got coming in, having to balance higher interest payments with increased costs on things like benefits and wages.
“It seems incredibly unlikely that the chancellor won’t bow to political pressure to hand out some kind of crowd-pleasing, headline-grabbing treat, but his own rules will require him to tread carefully.
“Inflation has fallen but it is still way off target and those last few percentage points are usually the hardest to shift.
“Stimulating growth whilst keeping a lid on consumer spending might seem like trying to cook a turkey without turning on the oven.
“In the long term, business focused growth measures could lay the building blocks for future success but they won’t make a splash and when voters are hungry it’s hard not to feed them, particularly as we begin to approach a general election.”
