• Public sector net borrowing in January 2013 recorded a surplus of £11.4bn, compared with net borrowing of -£6.4bn (a repayment) in January 2012
Commenting on the public sector finances for January 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:“The headline figure points to a significant improvement, with a debt repayment this year that is £5bn larger than last year. However this figure is inflated by the inclusion of a £3.8bn transfer from the Bank of England’s QE money to the Treasury. For the first 10 months of the current financial year, net borrowing is larger than a year ago, and there is a risk that total borrowing for the full year will be larger than the OBR predicted in December. The figures also confirm the pressures facing the UK corporate sector. While income tax and VAT receipts show a healthy 4% growth in January this year, corporation tax receipts recorded a decline of 13% when compared with January 2012.
“Britain’s structural deficit remains unacceptably high, and the increase in our net debt reinforces the case for adhering to a realistic deficit cutting plan. The Chancellor is facing serious challenges. To maintain confidence, he must persevere with real cuts in current spending, while prioritising measures that will enhance the productive potential of the economy. The large decline in corporation tax receipts highlights the need to support growing companies with the ability to make profit, and the lack of finance available to these companies must be urgently addressed.”