George Osborne is drifting further off course from his budget deficit reduction targets, new official figures showed today.
Public borrowing for April – the first month of the 2016-17 financial year - came in at £7.2bn. That was higher than the £6.5bn expected by economists.
The 12-month rolling sum of the deficit is now tracking at £75.6bn. The Office for Budget Responsibility has forecast the deficit to fall to £55bn by next March.
Full year borrowing for 2015/16 came in at an upwardly revised £76bn - £3.8bn higher than the £72.2bn the OBR had expected in the March Budget.
Economists suggested that with the economy slowing down the chances of the Chancellor hitting his next full-year target are receding.
“Borrowing would need to be £1.8bn a month lower than in 2015-16 in order to achieve the OBR’s full-year forecast of £55.5bn” said Martin Beck of the EY ITEM Club. “This looks to be a tall order, particularly given that the recent weakness in activity appears to be dampening growth in tax receipts”
Analysts added that Brexit would make the target unreachable entirely.
“Should the UK vote to leave the EU in June’s referendum, the Chancellor’s fiscal targets and plans would undoubtedly be blown out of the water and there would need to be major adjustments” said Howard Archer of IHS Global Insight.
