They say a picture tells a thousand words, so a graph seems an appropriate way to start off this blog.Here is a summary of the OBR's forecasts for growth in 2013, taken from past Autumn Statements and Budgets, as well as the latest median forecast published by HM Treasury:
It's not great news, and the persistent deterioration of the economic outlook has also impacted on the public finances.
Despite the boost provided by the decision in the Autumn Statement to transfer balances from the Bank of England's Asset Purchase Facility to the Exchequer, January's public finance data from the ONS did not provide particularly comforting reading:
Receipts: boosted by BoE, but otherwise lower than expected
- There was a surplus in January, which is usual as this is the month where the highest number of tax receipts are received
- The surplus was boosted by the receipt of the first payment from the Asset Purchase Facility. Excluding this, however, annual growth in receipts was only 1.1%, well below December's forecasts.
- Proceeds from the 4G sale will reduce borrowing, though by less than expected in the Autumn Statement forecasts.
- Corporation tax receipts fell 13.5% over the year largely driven by a fall in receipts from the oil and gas sector following a sharp drop in production and an increase in investment.
Spending: higher than expected
- Central government spending was 4.1% higher than the previous January
- Although debt interest payments were down 22%, net social benefits were up 8.4% and other spending was up 5.3%. (Other spending was partly affected by timing of net transactions to the EU which should be offset in later months)
What does this mean for the public finances?To meet borrowing forecasts from December's Economic and Fiscal outlook, borrowing would have to be £6.4bn lower than last year in February and March.
So that's 2012/13. What about the year ahead? The median forecast suggests we're likely to see the OBR forecasting a higher figure for borrowing in 2013/14 compared with their previous as shown in the graph below: