Borrowing is Falling but policy seems "All At Sea" ...

Good news for the Chancellor this week. In the first three months of the financial year, borrowing fell to £69.5 billion compared to almost £120 billion last year.

The out turn was £19 billion below the OBR forecast. The fiscal watchdog had penciled in borrowing of £234 billion in the current financial year. If the current trends were to be maintained, the outcome could be a drop in borrowing levels to around £175 billion.

The fall reflects stronger than expected tax receipts and lower than expected spending. The OBR had forecast growth of just 4% in the current year. Market expectations are for growth of between 7% and 8% this year, a significant adjustment worth between £30 and £40 billion in receipts alone.

Corporation Tax, Income Tax, and National Insurance Receipts were all much higher. Stamp duty receipts spiked in June, as transactions were brought forward to beat the deadline. The downside surprise in the data, was the reduction in government spending due to lower subsidies including CJRS and SEIS. Social spending was lower, as was the expected debt interest costs, despite the rise in total debt to £2.2 trillion.

The recovery is on track despite the Pingdemic shock. Borrowing is set to fall to less than 5% of GDP in the net financial year. Even so policy seems "All At Sea" as the Treasury seeks control. No money for police pay, no money for doctors as applicants for training places are told to come back next year. No money for overseas aid, no money for leveling up. No money to complete the extreme Northern loops of HS2.

The Chancellor is set to announce his three year spending plans in the Autumn. Budget action is set to be delayed until the Spring. It is not clear if the Chancellor and the Prime Minister are swimming in synch ... evidence of formation remains "all at sea" ...