Government borrowing higher than forecast in June - ONS

19th Jul 2024 07:32

(Sharecast News) - Public sector borrowing came in higher than expected in June, official data showed on Friday.

According to the Office for National Statistics, government borrowing - the difference between public sector spending and income - was £14.5bn, excluding public sector banks.

That was £3.2bn less than June 2023, and the lowest June borrowing figure since 2019.

However, it was higher than the £11.6bn forecast by the Office for Budget Responsibility.

Borrowing in the first three months of the fiscal year reached £49.8bn, £3.2bn than expected by the OBR, as receipts slightly missed expectation while spending rose.

Public sector net debt excluding public sector banks was estimated to be 99.5% of GDP, levels last seen in the early 1960s.

It was also 2.8 percentage points more than at the end of June 2023.

Peter Arnold, chief economist at EY, said: "The public finances data tend to be prone to revision, so the picture for the start of the fiscal year could look different in a few months' time.

"But as things stand, the EY Item Club thinks this underperformance is likely to persist. The OBR's assumptions for gilt yields and Bank Rate look too low, and this suggests debt servicing costs will prove to be higher than expected.

"Looking further ahead, the EY Item Club awaits the new chancellor's first budget with interest: maintaining the net debt rule will mean that, in the absence of forecast revisions from the OBR, the new government will face a similar need to consolidate to their predecessors."

The interest payable on central government debt was £7.4bn, £5.5bn less than June 2023. Interest on index-linked gilts rises and falls in line with the retail price index.