Borrowing figures make grim reading for Osborne

George Osborne’s lack of a growth strategy could easily undermine his deficit reduction plans, writes Duncan Weldon.

Today’s public sector borrowing figures (pdf) won’t make for cheery reading at the Treasury. Borrowing came in at £14.0 billion in June 2011, up from £13.6bn in June 2010. Cumulative borrowing in the first three months of the financial year 2011-12 now stands at £39.2bn, only a fraction down on 2010-11 despite the beginning of spending cuts and tax rises.

The early indications are that George Osborne’s changes in fiscal policy are not bringing down the deficit. Rather than looking at the volatile monthly series, it is worth taking a moment to look at the quarterly deficit figures:


The prospects now for Mr Osborne meeting his borrowing target of £122bn for 2011/12 (as forecast (pdf) by the Office for Budget Responsibility in March now look weak. The OBR forecasts are premised on growth in 2011 of 1.7% but the Treasury’s own latest round up of independent forecasters (pdf) suggests growth will actually be 1.3% – which would no improvement at all on 2010.

If in autumn the OBR is forced to revise down its growth forecast it will have no choice but to also revise up its borrowing forecasts. In March this year the OBR revised down its 2011/12 and 2012/13 growth forecasts by 0.3% – it then had to revise up borrowing for those two years by £14.3bn (i.e. by more than the VAT rise raises annually).

If the OBR has to revise down 2011 growth by 0.4% or more then the impact on the deficit could be even larger. Mr Osborne’s lack of a growth strategy could easily undermine his deficit reduction plans.

23 Responses to “Borrowing figures make grim reading for Osborne”

  1. Me

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  2. Chris Horner

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  3. Altany

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  4. Duncan Weldon

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  5. Ashley Wise

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  6. John Lever

    Borrowing figures make grim reading for Osborne //t.co/SpeRBwt

  7. Alex Belardinelli

    RT @leftfootfwd: Borrowing figures make grim reading for Osborne //t.co/WqX4Yrs – analysis by @duncanweldon

  8. Nicola Smith

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  9. Graham Copp

    .@DuncanWeldon on public debt in the UK, which isn't going down despite savage spending cuts. Get that USA? //t.co/K7zCviO

  10. Michael

    Borrowing figures make grim reading for Osborne l Left Foot Forward – //tinyurl.com/3rq4j55

  11. J. Gunner

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  12. H. O.

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  13. neil lambert

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  14. anyleftiwonder

    He’ll wriggle out of any blame – this time it will be the euro to blame.

  15. Oxford Kevin

    That is quite an impressive job by Gideon, considering the 2010 Q2 deficit included quite a lot of the Labour stimulus spending. The stimulus is now pretty much gone from the budget figures but the deficit is pretty much the same.

    I don’t think he could do a better job of screwing up the economy if he was actually trying.

    Kevin

  16. J. Gunner

    Borrowing figures make grim reading for Osborne l Left Foot Forward – //tinyurl.com/3rq4j55

  17. Will Straw

    If the OBR downgrades its growth forecast, it will have to revise up its borrowing forecasts says @DuncanWeldon //t.co/gLhVzj2

  18. Chris Goulden

    RT @wdjstraw If OBR downgrades its growth forecast, it will have to revise up its borrowing forecasts says @DuncanWeldon //t.co/gLhVzj2

  19. Catherine McDonald

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  20. lesa

    Borrowing figures make grim reading for Osborne: //bit.ly/opk8en writes @DuncanWeldon

  21. Mr. Sensible

    Austerity is hurting but not working. Time for Plan B…

  22. Kevin Richards

    Whats gone wrong George? RT @leftfootfwd: Borrowing figures make grim reading for Osborne //t.co/mcoSsNL

  23. Glen Davies

    George Osborne's 2.1 degree in Modern History doesn't seem to be helping the UK's economy! //bit.ly/r20xZx Settle for a Plan C? #labour

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