Public sector borrowing falls again!

[I1L2T3]

OK.

Let's

 

(1) Increase ther number of public sector jobs.

(2) Stop the changes in family allowances

(3) Increase JSA etc by RPI

(4) Retract all proposed redundancies in the armed forces.

 

etc, etc, etc

 

I wonder what that will do to the PSBR?

 

It depends on how much economic growth there is.

 

What happens if the plans continue and there is no growth? All the thing you list further limit the amount of money circulating in the economy. Remove that and in a zero growth environment people will spend less money, businesses will contract and maybe die, the Treasury will get less tax receipts.

 

Absolutely none of what Osborne's plan was supposed to do can be achieved without growth. The results of continuing are very predictable and were warned about by many economists as soon as the plan started. All the warnings have been proved correct.

[maxmaximus]

Osborne has increased our debt and stifled demand in the economy causing tax receipts to fall. Year on year borrowing is growing again.

 

He's done nothing to deal with the underlying deficit, using accounting tricks instead to give an illusion of deficit reduction. The transfer of Royal Mail pension assets is a one-off and land the taxpayer with a perpetual responsibility to fund Royal Mail pensions from annual tax receipts. The gilt interest transferred to the Treasury needs to be repaid further down the line. Like Labour chancellors before him Osborne is stealing from future generations. He's no better.

 

The 4g licence auction may buy a bit of breathing space but again it's a one-off.

 

But they haven't fallen,

 

Tax receipts since 1963

 

2000-01 359.3 36.3

 

2001-02 369.1 35.8

 

2002-03 375 34.3

 

2003-04 397 34.3

 

2004-05 427.1 35.2

 

2005-06 456.8 35.9

 

2006-07 486 36.1

 

2007-08 516 36.2

 

2008-09 508 35.8

 

2009-10 477.8 34

 

2010-11 528.9 35.8

 

2011-12 550.6 36

 

2012-13 569 35.5

[Fallow]

Lies....damned lies....statistics?

[I1L2T3]

But they haven't fallen,

 

Tax receipts since 1963

 

2000-01 359.3 36.3

2001-02 369.1 35.8

2002-03 375 34.3

2003-04 397 34.3

2004-05 427.1 35.2

2005-06 456.8 35.9

2006-07 486 36.1

2007-08 516 36.2

2008-09 508 35.8

2009-10 477.8 34

2010-11 528.9 35.8

2011-12 550.6 36

2012-13 569 35.5

 

Thanks for the data. As you have shown as a percentage of GDP they are projected to

fall for 2012-13. It is not even clear if the 2012 data is an actual. You also miss off projected receipts for the next few years which are lower as a percentage of GDP than the projected 2012 figure, if that was even achieved. The projection also appears to be based on growth predictions that now look too optimistic.

 

Your data appears to be from August 2012 anyway since which time receipts have been less than expected.

[maxmaximus]

Thanks for the data. As you have shown as a percentage of GDP they are projected to

fall for 2012-13. It is not even clear if the 2012 data is an actual. You also miss off projected receipts for the next few years which are lower as a percentage of GDP than the projected 2012 figure, if that was even achieved. The projection also appears to be based on growth predictions that now look too optimistic.

 

Your data appears to be from August 2012 anyway since which time receipts have been less than expected.

 

Less than expected isn't a fall, its just not as high as they forcast.

 

Total tax receipts and income tax receipts are higher now than they have ever been.

 

http://www.hmrc.gov.uk/statistics/receipts/info-analysis.pdf

[I1L2T3]

Less than expected isn't a fall, its just not as high as they forcast.

 

We have to wait for the final data for 2012. Indications are that receipts are likely to be short of forecast. As your data shows even with an overly-optimistic growth forecast receipts are forecast to fall as a % of GDP.

 

You can split hairs all you want but the salient point is that tax receipts are not what was forecast. It's exactly the same trap Labour fell into - poor spending decisions driven by poor forecasting.

[maxmaximus]

We have to wait for the final data for 2012. Indications are that receipts are likely to be short of forecast. As your data shows even with an overly-optimistic growth forecast receipts are forecast to fall as a % of GDP.

 

You can split hairs all you want but the salient point is that tax receipts are not what was forecast. It's exactly the same trap Labour fell into - poor spending decisions driven by poor forecasting.

 

I'm not disputing they aren't as high as forecast, I'm simply saying they have risen and not fallen.

They have consistently gone up since the economic crash, and if we are borrowing too much it’s because we are spending too much.

They have more control of what they spend than what they receive and spending needs cutting.

[Vague_Boy]

I just thought I'd post this to clarify a few points from those who claim the UK's budget deficit is rising. It isn't

 

It is for December

 

UK deficit higher than expected [Financial Times, January 22, 2013]

 

Britain was forced to borrow more than expected last month to plug the gap between spending and revenues as the government struggled to improve the public finances at a time of economic malaise.

 

The budget deficit was £15.4bn in December, more than the £14.8bn in the same month a year ago and a touch higher than City economists were expecting.

 

Still, give it a few months and that figure will be rounded down to something more "palatable". A mere £14 billion or so can do much harm can it?

 

UK projected Public Debt 1900-2015

 

Ohhh...

 

Just 6pc of the British realise that the national debt is rising [The Spectator, 4 December 2012]

 

Whether we're hitting record monthly deficits or not, the national debt is still rising by about £13 or £14 billion a month.

 

UK's total debt forecast to hit £10 trillion by 2015

 

 

And what about other borrowing which is up?

 

So, if borrowing is up, how do you square that with the "savage" cuts you're always on about?

 

 

Borrowing hits record high, but we are borrowing less?

 

Read the OP's post, that figure has been revised downward.

 

 

This takes total government net debt to £1,065bn, equivalent to 67.9% to total annual economic output.

 

That £1 trillion figure excludes a lot of unfunded obligations.

 

Government urged to reveal 'true' national debt of £4.8 trillion

 

The Institute of Economic Affairs (IEA) has calculated that the national debt is £4.8 trillion once state and public sector pension liabilities are included, or £78,000 for every person in the UK.

 

The IEA raised its concerns after the latest public finances data from the Office for National Statistics (ONS) this week, which showed that the total debt, excluding bank bail-outs, is £816bn – itself a record high. However, the figures strip out the state's pension liabilities in a contravention of standard accounting practices.

LINK

 

And that was back in 2010!

 

Ignoring public sector pensions liabilities (£2.7 trillion) only works if everyone commits suicide on retirement day (sort of a sexagenarian version of Logan's Run).

 

Those people are out there now, they're going to retire and they're going to want a pension.

 

Rocket science it ain't.

 

---------- Post added 22-01-2013 at 18:57 ----------

 

I believe the plan is that the deficit will fall to zero and become a surfeit in 2015 or some year in the future, at which point the debt will start to reduce.

 

And they all lived happily ever after.

 

Let's hope interest rates never rise again:

 

In 1982 Margaret Thatcher's government had to pay 15% to borrow money for three years. This came in the form of a bond (a gilt). Anyone with money – be it a rich country or a pension fund – could invest in the bonds, and receive 15% interest in return.

 

But over time the government's borrowing costs have fallen – dramatically. Now, the government only has to pay 2% to borrow money over the same period. That's seven times cheaper than in 1982.

 

And low interest rates make it easier to borrow money.

 

Debt has been getting steadily cheaper for three decades. That has allowed the government to borrow more and more money, without having to face the consequences.

 

But these 'good times' are about to come to an abrupt end.

 

The simple truth is, if interest rates were at their normal rate of 5% - instead of the extremely low 2% they're at right now – there's absolutely no way Britain could ever repay its debts. In fact, at normal rates of interest we're already bust. Not just 'in over our heads' but six feet under.

 

It's simple maths. If interest rates moved back towards the normal 5% level, our cost of borrowing would triple.

 

Just to put that into context, if our current debt repayments tripled, the government would have to take drastic action – like abolishing the state pension. Or privatising the NHS. Or pushing tax rates back up to 90%, as they were in the 1960s.

LINK

[I1L2T3]

I'm not disputing they aren't as high as forecast, I'm simply saying they have risen and not fallen.

They have consistently gone up since the economic crash, and if we are borrowing too much it’s because we are spending too much.

They have more control of what they spend than what they receive and spending needs cutting.

 

They have gone up as a total sum. You would expect that - GDP has grown a little over the last 2-3 years. But as a percentage of GDP receipts are set to fall, missing targets required to cut the deficit.

 

It may be that the finalised figures for 2012 receipts do show an increase but it's academic anyway when Osborne's spending is accelerating faster than any increases in receipts.

 

Incidentally much of any increase is likely to be from NI and VAT rate increases, one of which reduces disposable income while the other increases the prices of many goods for consumers struggling with an already inflationary environment.

[maxmaximus]

They have gone up as a total sum. You would expect that - GDP has grown a little over the last 2-3 years. But as a percentage of GDP receipts are set to fall, missing targets required to cut the deficit.

 

It may be that the finalised figures for 2012 receipts do show an increase but it's academic anyway when Osborne's spending is accelerating faster than any increases in receipts.

 

Incidentally much of any increase is likely to be from NI and VAT rate increases, one of which reduces disposable income while the other increases the prices of many goods for consumers struggling with an already inflationary environment.

 

Income tax rose according to the HMRC link I posted, that must mean more people in work because personal tax as dropped.