July public borrowing to show drop in surplus
The public sector net borrowing surplus was probably lower this July than a year ago as corporate tax receipts slipped, and the government finances look set to worsen further as the economy slows sharply.
U.S. banks said "quietly" borrowing $50 billion from FedA Reuters poll of 17 economists showed a public sector net cash surplus of 10 billion pounds in July, down from 13.3 billion pounds in the same month last year.
July is traditionally a surplus month because large amounts of corporation tax fall due in the month.
As well as corporation tax, value added tax receipts and residential stamp duty are expected to have suffered as consumer spending fades and the housing market slips.
This will probably reinforce expectations that the government will break its fiscal rule of keeping borrowing below 40 percent of gross domestic product over the economic cycle.
In June the public sector net cash requirement rose to 15.459 billion pounds, the largest total since the series began in 1984.
"The experience of the early-1990s provides a stark warning about how rapidly the public finances can deteriorate: from modest surpluses at the end of the 1980s to gargantuan PSNB deficits of 7.5 percent and 7.8 percent of GDP in 1992-93 and 1993-94," said Ross Walker at RBS in a note.
He said that public finances have suffered a near 10 billion pound deterioration in the first quarter of the 2008-2009 financial year.
The poll also showed the government's preferred accruals-based measure of public sector net borrowing surplus of 4.3 billion pounds, down from 6.5 billion in July last year.
Earlier this month, the International Monetary Fund said the government's public debt ceiling of 40 per cent of GDP was likely to be breached and that concrete plans should be made to bring debt back to target if this happened.
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