Return to growth may provide a temporary fix for UK public finances, but if
that growth proves as unsustainable as the pre-crisis variety, it’s no
solution at all
Even assuming the improvement in tax revenues
continues, the outturn for this year will still be no better than the
OBR was expecting a year ago before the impaired forecasts of the March
Budget were made.
By
Jeremy Warner: Rejoice. Like the economy, the UK public finances are at last moving in the
right direction. October is an important month for corporation tax inflows,
and most of the anecdotal evidence is that with an improving economy, they
are picking up nicely.
Add in expected increases in taxes from the housing market – and with rising
consumption, some improvement in VAT receipts – and by the end of this
financial year, public sector net borrowing could be as much as £10bn lower
than the Office for Budget Responsibility (OBR) was forecasting as recently
as the last Budget in March. Another feather in the Chancellor’s cap then?
Time for a reality check. Even assuming the improvement in tax revenues
continues, the outturn for this year will still be no better than the OBR
was expecting a year ago before the impaired forecasts of the March Budget
were made. We are merely back to where we were at the time of last
December’s Autumn Statement, and we are still years away from where the
Chancellor expected to be when he unveiled his emergency Budget in June 2010.