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  • #1

    There's no escape

    Borrowing goal looks beyond Osborne’s reach

    The Chancellor will be dealt a blow this week by official figures that will pile more pressure on the AAA sovereign credit rating and make it almost impossible for him to repeat his claim that borrowing has fallen every year under the Coalition Government.

    Wednesday’s public finance figures for January will be closely scrutinised because they will be the last before the Budget on March 20.









    By Philip Aldrick

    9:36PM GMT 16 Feb 2013

    6 Comments


    In December, George Osborne made great play out of the fact that the Treasury’s independent forecaster expected borrowing to decline in 2012/2013, despite the collapsing economy. However, public finance figures to be published by the Office for National Statistics on Wednesday are expected to put the target out of reach.


    “Excluding helpful one-off factors, borrowing will probably now be projected to rise in 2012/13 compared to last year’s level,” Vicky Redwood, UK eco­nomist at Capital Economics, said. “It will look likely the ­Office for Budget Responsibi­lity will have to revise up its forecast next month.”


    At the Autumn Statement in December, the OBR forecast that underlying borrowing would fall to £119.9bn in 2012/2013, marginally lower than the latest official estimate of £121.6bn for the previous year. Victoria Clarke, UK economist at Investec, said that, following Wednesday’s data, the OBR is likely to raise its estimate in the Budget by “some £10bn or so”.


    Howard Archer, UK economist at IHS Global Insight, said the likely overshoot would jeopardise the UK’s top-notch credit rating. “The January public finance data will likely do little to change high and mounting expectations that at least one of the credit rating agencies will strip the UK of its AAA rating within the next few months,” he said.


    Wednesday’s public finance figures for January will be closely scrutinised because they will be the last before the Budget on March 20.

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    January is a key month for tax receipts, with large sums from corporation tax and self-assessment income tax. As a result, the Exchequer usually raises more than it spends, which helps cut borrowing. Ignoring one-off effects, and on a comparable basis with last year, Investec expects a £10.8bn surplus — £4.4bn more than last year. The pace of government spending growth is expected to “soften modestly”, Ms Clarke said.

    The figures will be flattered by one-off items such as the Treasury’s decision to take over the Royal Mail pension scheme and to seize the £37bn of cash in the Bank of England’s quantitative easing (QE) programme. It will take an £11.5bn slice of the QE cash, which will cut the headline borrowing requirement.
    Including the one-off gains from the Royal Mail and QE, the OBR expects borrowing this year to be £80.5bn. Inves­tec reckons it will raise that to about £90.5bn in the Budget.

    Officials are now said to be hoping the 4G mobile spectrum auction will raise more than the £3.5bn forecast to help bring down borrowing.

    Jobs figures this week are expected to show unemployment remains at 7.7pc.






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    • mrs_trellis
      7 minutes ago


      Osborne has failed - and by association so has Cameron.
      They have pursued the wrong policies because they have no understanding or vision or conviction.
      Incredibly, they appointed those who failed previously to advise them: Heseltine and Clarke (both Bilderbergers) - so-called 'senior Tories' and 'big beasts' - whose most memorable contribution was the trashing of the Thatcher legacy to such an extent that Labour then won thirteen disastrous years in government.
      And Duncan-Smith - the 'quiet man' - whose wife Betty helped him out of the leadership role without him ever having fought an election. Now he has hammered a few more nails into the welfare and taxation system. When RTI comes in at the end of next month, employers all over the country will run for the hills and stop employing people because it's a bridge too far for SMEs. Well done 'quiet man'.
      It's not worth losing any more sleep over these losers. Yes the two Eds will be a million times worse, but by then most sensible people will have found somewhere else to live and work.
      The UK isn't coming back economically before 2025 at the earliest. And that's assuming we can find an intelligent leader after five years of reckless Labour government.


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    • CC
      8 minutes ago


      Borrowing to pay billions in overseas aid, borrowing
      to pay billions to the EU, borrowing to pay and house
      millions some who have never paid into the system,
      many like Qatada and Hamza and families bleeding the system
      dry, child allowance being sent overseas, it just doesnt
      stop. They just keep taxing you more and more to pay
      for this lot. I for one cannot accept this, it seems the
      British people have done in the past by the ballot box
      but things are changing, I think its time to give UKIP
      a try, if they never get the chance we will never know.
      It really is time for a change.


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    • victormeldrum
      11 minutes ago


      Politics is the art of what is possible and Osbourne was given a difficult hand to play with lots of events he has no control over plus his own mistakes. The gilt market of recent has helped him but it now appears to be getting a little weary of QE and public spending deficits. Things may start to get a little more awkward especially as we get closer to a general election and the markets begin to factor in a Labour government.


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    • MrEdtheTalkingHorse
      12 minutes ago


      Osborne couldn't cut himself shaving,


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    • devondickie
      27 minutes ago


      If you take out the one offs, the dodgy items and the outrageous smash & grab raid to steal back the interest paid on our debt held by the Bank of England, BOTH the annual deficit AND the total accumulated debt are RISING.
      This means that we have suffered a double dip recession for absolutely nothing - we have lost nearly 10% of national output in a pointless and futile guesture of austerity whose only achievement has been to dig the UK economy even deeper into the mire.
      Living standards have declined hugely as a result of the austerity programme, cutting family incomes and driving millions into poverty for no improvement in either our debt position or our national ouput.
      The Office for Budgetary Responsbility os an oxymoron - it is incredibly irresponsible, deluded and disreputable.
      It is only months since the OBR stopped forecasting 3% growth by the end of 2014 - it has been wrong on inflation, growth, jobs and virtually every other indicator.
      I forecast a collapse in tax receipts this month as incomes have been hammered, so the effect of advance payments in the income tax system by the self-employed are likely to go massively into reverse, punching a huge hole in the tax take through lower payments and significant repayments of advance tax paid last year.


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    • clandulla
      34 minutes ago


      David Cameron has a demonstrable weakness in his choice of lieutenants. Cameron has consistently supported George Osborne as his Treasurer in the face of a growing mass of evidence that he is a hopeless failure in that rôle. I never thought that anybody else could ever get close to Gordon Brown's title of 'Britain's Worst Ever Treasurer' but, less than a decade later, George Osborne is edging ever closer to taking over that mantle.
      By continuing with Osborne's bogus policies of 'austerity', Britain's government budget deficits are simply going to get bigger and bigger. In the end, some grim faced, bespectacled gents from the IMF will have to take the tough action to cut government expenditure that George Osborne is clearly incapable of doing.
      According to the OECD (Annex Table 25), British government expenditure for 2012 will be 49.0% of GDP and its income (Annex Table 26) will be 42.4% of GDP - a gap of 6.6% of GDP. In fact, the deficit for 2012-13 will come in at around £130bn which is more like 8% of GDP. This is after three years of so-called 'austerity'.
      If the British structural budget deficit is stuck at more than 5% of GDP, it is a recipe for national bankruptcy. George Osborne's tough talk and earnest assurances that "Britain is on the right track" are just so much piffle if these assertions are not backed up by actions commensurate with the problem. It is a safe bet that Britain will lose its AAA credit rating this year and one could almost as confidently predict a massive devaluation of sterling to close to parity with the euro in the same time frame.
      We can only hope George Osborne does an 'Andy Coulson' and jumps because it is pretty obvious David Cameron doesn't have the ticker to fire him.



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  • #2
    Re: There's no escape

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