The latest government borrowing figures have been revealed by the Office for National Statistics – Holly Adams/BloombergThank you for reading this post, don't forget to subscribe!
The government borrowed £19.8 billion less than the official figures predicted in the first half of the year, raising hopes for tax cuts before the next election.
In the first half of the financial year, public sector net borrowing excluding banks amounted to £81.7 billion, which was £15.3 billion more than the same period in the previous year, according to the Office for National Statistics (ONS).
This was, however, £19.8 billion less than the forecast of £101.5 billion made by the Office for Budget Responsibility (OBR) in March.
Total net borrowing by the public sector, excluding public sector banks, stood at £14.3 billion in September, up from £11.6 billion the previous month.
This was £1.6 billion less than the corresponding month last year and the sixth-highest borrowing in September since monthly records began in 1993.
Furthermore, it fell below the consensus expectation of £18.3 billion and was £6.2 billion lower than the OBR’s forecast in March.
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07:32 am bst
Autumn apparel sales decline due to warm weather, impacting retail sales
According to official data, retail sales decreased last month as stores attributed the decline to “continued cost-of-living pressure” on consumers and lower sales of autumn clothing caused by unseasonably warm weather.
In September, retail sales volumes dropped by 0.9 percent compared to the previous month, following a 0.4 percent increase in August, as reported by the Office for National Statistics (ONS).
The decline was more severe than anticipated, with analysts predicting a 0.3 percent decline for September.
Grant Fitzner, Chief Economist at the ONS, stated:
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Public sector net debt reached just below £2.6 trillion at the end of September, representing around 97.8 percent of Britain’s GDP.
The debt-to-GDP ratio was 2.1 percentage points higher than in September of the previous year and remains at levels observed in the early 1960s.
Chancellor Jeremy Hunt declared:
Government borrowing reduced due to tax increase
The government enjoyed the benefit of increased tax revenue due to inflation, resulting in borrowing being lower than anticipated.
In September, central government receipts amounted to £77.3 billion, up £3.4 billion from the same month last year and £1.9 billion higher than the £75.4 billion predicted by the OBR in March.
However, higher interest rates have led to an additional £20-£30 billion in servicing costs for the national debt, according to the Chancellor’s statement earlier this month.
The borrowing figure for September, while lower than expected, was still the sixth highest on record for the month.
In September 2023, public sector net borrowing, excluding public sector banks, amounted to £14.3 billion – £1.6 billion less than in September 2022.
It was the sixth-highest borrowing amount for the month of August since monthly records began in 1993.
– Office for National Statistics (ONS) (@ONS) 20 October 2023
Thank you for staying with me. Jeremy Hunt has been given the flexibility for tax cuts ahead of the next election, as government borrowing in the first half of the financial year was nearly £20 billion lower than official forecasts.
In the six months up to September, public sector net borrowing excluding banks amounted to £81.7 billion, significantly below the Office for Budget Responsibility (OBR) forecast of £101.5 billion in March.
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Asian shares retreated as Wall Street came under pressure due to the first rise in 10-year U.S. Treasury bonds’ yield to 5 percent since 2007.
Tokyo’s Nikkei 225 index fell 0.5 percent to 31,266.84 after the government reported that consumer inflation in September exceeded expectations. The core inflation rate, which excludes volatile prices of fresh foods, increased by 2.8 percent in September compared to the previous year.
This marks the first time in 13 months that core CPI inflation has fallen below 3 percent. However, inflation excluding fresh food and fuel prices stood at 4.2 percent, still close to the 40-year peak of 4.3 percent recorded earlier this year.
China announced that it is keeping its benchmark lending rates unchanged in accordance with market expectations, with the one-year loan prime rate at 3.45 percent and the five-year LPR remaining at 4.2 percent.
Hong Kong’s Hang Seng fell 0.4 percent to 17,236.04 and the Shanghai Composite index dropped 0.3 percent to 2,995.23.
The Kospi in Seoul declined by 1.5 percent to 2,380.62. Australia’s S&P/ASX 200 decreased by 1.3 percent to 6,893.60. India’s Sensex fell by 0.4 percent, and Bangkok’s SET declined by 0.3 percent.
On Thursday, the S&P 500 fell by 0.8 percent to 4,278.00 as bond yields rose, while the Dow Jones Industrial Average dropped by 0.7 percent to 33,414.17. The Nasdaq Composite fell by 1 percent to 13,186.18.
The yield on the 10-year Treasury rose to 4.99 percent from 4.91 percent late Wednesday, but then eased its gains to 4.98 percent.