Connect to share and comment

UK March public finances mostly better than forecast

PlacardEnlarge
(Globalpost/GlobalPost)

LONDON (Reuters) - Britain's budget deficit fell slightly last year, official data showed on Tuesday, saving the country's embattled finance minister some embarrassment as criticism of his austerity programme mounts.

**********************************************************

KEY FIGURES FOR UK PUBLIC BORROWING (IN BLN STG)

MARCH F'CAST

PSNB-ex 15.142 15.5

PSNB 16.747 14.0

PSNCR 31.270 n/a

(For previous stories click on)

DAVID TINSLEY, BNP PARIBAS

"There's a small crumb to be had from the fact that borrowing is less than last year, but really that's a political point not an economic one. The substantive point is that tax revenues are very weak because the economy - nominal GDP growth - has been very weak. The spending side looks better, the government seems to be delivering on spending reductions but failing on getting growth and therefore revenues, and that's why the fiscal position isn't improving. It's flatlining."

BRIAN HILLIARD, SOCIETE GENERALE

"The thing for the markets is that despite the full-year deficit coming in within 0.3 billion (pounds) of the OBR's projection, there is a change to the DMO remit, so there's an increase in debt sales of 6.7 billion planned for next year.

"The 0.3 bln is neither here nor there, it's noise, I don't think it alters the basic story at all. The public finances are still under pressure, the key thing is that the deficit is projected to rise next year because we don't have the benefit of the one-off factor of the transfer of the Royal Mail pension plan."

JAMES KNIGHTLEY, ING

"Chancellor Osborne has made it clear that he won't be changing course despite growing pressure from the likes of the IMF. Instead, he advocates greater monetary policy flexibility with stimulus coming from the Bank of England. We continue to look for more QE and an expansion of the Funding for Lending Scheme, calls for which could increase following Thursday's GDP numbers, which are likely to show very muted growth at best."

GEORGE BUCKLEY, DEUTSCHE BANK

"In the grand scheme of things it's not huge, but it still just illustrates how the public finances remain a concern for the government. We've seen another downgrade over the past week...it's going to take a long time to get back to where the government would like it to be in terms of the underlying fiscal deficit, back at zero. It's going to take many years.

"It has been falling over recent years, so it's encouraging news. They've taken about a third off the deficit, but that's after three years of relatively decent austerity. There's a long way to go yet and it's going to be for much longer than the rest of the time that this coalition government has in power."

SAM HILL, RBC:

"It looks to me as though the deficit for the full fiscal year has come in pretty close to the budget forecast so I think there is little by way of surprise in the headline figures. As far as the market is concerned, the notable piece of news here is the upwards revision of the gilts sale remit this year of 4.7 billion (pounds) and another 2 billion T-bills. I think that will be the main focus and the fact that is concentrated in medium term gilts, so we may see a small negative reaction in the belly of the gilt curve in the immediate aftermath. But I don't think it's too much of a shock."

VICTORIA CLARKE, INVESTEC

"The Chancellor just made it in under the OBR's forecast, albeit by the skin of his teeth. The bigger test will be if he can continue to meet the forecasts for the years ahead, and we think it's looking vulnerable because of the weakness of euro area, which could decrease tax revenues and mean higher spending pressures."

(Editing by William Schomberg)

http://www.globalpost.com/dispatch/news/thomson-reuters/130423/uk-march-public-finances-mostly-better-forecast