Public finance bulletin: July 2012

Today the Office for National Statistics and HM Treasury published Public Sector Finances June 2012. We now have details of central government receipts, central government spending, public sector net investment, borrowing and debt for the first three months of financial year 2012-13.

Rowena Crawford, a Senior Research Economist at the IFS, said:

"On the face of it today's figures continue to be disappointing, with public sector net borrowing so far this year being £6.8 billion higher than over the same period in 2011. This has largely arisen from local authorities running a substantially smaller surplus this year than last, while central government has borrowed about the same amount as it did last year to fund its own current consumption.

For central government, tax receipts have grown less quickly to date than forecast by the Office for Budget Responsibility for the year as a whole, primarily due to weak growth in receipts from taxes on personal and corporate incomes. But this has been largely offset by lower-than-forecast growth in central government current spending. However, to some extent, central government current spending so far this year has been artificially depressed relative to last year by some grants to local authorities not having been paid as early in the year. Once these grants are paid by central to local government, the position for central government is likely to weaken and that for local government to improve."

Headline Comparisons

• Central government current receipts in June were 3.6% higher than in the same month last year. Receipts over the three months April to June were 2.5% higher than in the same months of 2011. The Office for Budget Responsibility's (OBR's) forecast at the time of the March 2012 Budget implied that central government current receipts for the whole of 2012-13 would be 3.9% above 2011-12 levels.

• Central government current spending in June was 0.8% lower than in the same month last year. Spending over the three months April to June was 2.2% higher than in the same months of 2011. The OBR's forecast at the time of the March 2012 Budget implied that central government current spending for the whole of 2012-13 would be 3.1% above 2011-12 levels.
• Public sector net investment in June was £1.4bn, £0.1 billion less than was spent in June last year. Together, public sector net investment during the first three months of 2012-13 has been £3.7bn (excluding the impact of the transfer of assets from the Royal Mail Pension Plan to the public sector and the closure of the Special Liquidity Scheme (SLS)). This is 8.4% more than was spent between April and June in 2011. The OBR's forecast at the time of the March 2012 Budget predicted that net investment over the whole of 2012-13 would be £26.9 billion (excluding the impact of Royal Mail and the SLS), which is 1.0% above last year's level.