UK Borrowing Falls After Gift from EU
The UK government nearly halved its borrowing in December, compared to the same period in 2016, thanks to a European Union rebate.
12:11 12 February 2018
Public sector borrowing, which excludes state-owned banks, fell to £2.6 billion in December, a lower number than predicted and a £2.5 billion reduction from the end of 2016. The EU gave the UK a £1.2 billion rebate as a result of contribution changes and a reduction in the bloc’s budget.
The Office for National Statistics (ONS) said that public finances could be affected by Carillion’s collapse.
The ONS added that the government previously stated it would offer finance by the Official Receiver to ensure that public services are maintained.
It said that any effect of these financial interventions upon public sector finances will be made known in due course.
Public borrowing at 11-year low
The ONS revealed that public borrowing stands at £50 billion for the financial year to date, close to a 12 percent fall from 12 months earlier and the lowest year-to-date figure since 2007.
Pantheon Macroeconomics chief UK economist Samuel Tombs said that low public borrowing in December was due to a reduction in government spending, as opposed to a resurgent economy.
No pat on the back from Tombs
Tax receipts in central government rose at a slower pace in December than in the right months previous, while current expenditure fell by 0.8 percent, compared with 12 months earlier, largely due to the EU’s £1.2 billion credit.
Tombs added that the credit is a reflection of both a poor UK economic performance and a large EU budget, noting that contributions are related to the strength of the British economy relative to the EU as a whole.
What does this mean for the public?
The Government’s spending cuts typically affect the general public, who should be considering ways that they can improve their own finances by looking at other options to make their finances work for them, such as trading.
Trading offers the individual numerous advantages, including the ability to gain leverage. But what does leverage mean? It's essentially a facility that gives you increased exposure to the market you're trading than the figure you invested when you got into the trade. It can be a powerful addition to a trader's arsenal and is certainly relevant when additional finance is needed and borrowing is an unlikely option.
Looking for ways to make money work for the individual is especially crucial for those in self-employment at this time of year.
Government awaits tax payday
It is expected that the government will borrow £49.9 billion in the current financial year, ending in March. Any news that it has borrowed over that amount already might appear to be bad news.
There are millions of individuals and businesses right now filling in their tax returns, however, calculating the amount they need to pay HMRC and preparing to post millions of sizeable cheques.
A long road to recovery
By the end of March, the Government will see more money on its way to them that it feasibly needs, and so its borrowing for this year will likely be under £50 billion.
The government is not out of the woods when it comes to borrowing just yet, however. Productivity and growth for the coming years are expected to be grimmer than previously believed, meaning that balancing the books will take some time.
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