It’s tempting given the optimistic mood on the Conservative benches at the moment to think that everything is just great with the economy. Not so, according to today’s borrowing figures from the ONS, which show that government borrowing was higher than expected: George Osborne borrowed £13.3bn in May, up £0.7bn from the same month last year, and much higher than the £9.35bn forecast. Tax receipts have been weaker than expected, which has contributed to higher net borrowing.
Labour is saying that Osborne is now set to break his promise to balance the books by next year, while also arguing that it will balance the books but ‘in a fairer way’. The party still has a lot of detail to fill in on how on earth it would achieve this. The Treasury’s response is that ‘the job is not yet done which is why we must continue to work through the plan that is building a resilient economy’.
But Samuel Tombs from Capital Economics fears that the discrepancy between the economic recovery and the borrowing figures ‘contain tentative signs that the coalition may be beginning to struggle to bring down the deficit in line with the fiscal plans’.
The figures are a reminder that whoever wins in 2015, they’re still going to have a rough time and a big challenge ahead of them, no matter how cheery most of the statistical releases make the Tories at the moment.