UK public finances bounced back last month, following a relapse in August, as receipts for VAT, income and corporation tax hit a record high in September.
The bumper month saw income-tax related payments rise 4.1 per cent year-on-year in September while VAT and corporation tax receipts increased respectively by 3.2 and 12.7 per cent.
Given the month’s better performance, official numbers show that Public Sector Net Borrowing excluding banks (PSNBex) was down by 13.9 per cent over the first half of fiscal year 2015/16 to £46.3bn from £53.8bn in April-September 2014.
But despite September’s improvement, IHS Global Insight chief UK and European economist Howard Archer thinks “George Osborne still has his work cut out to meet his fiscal targets for 2015/16”.
Archer explains that if the pattern of the first half of the fiscal year continued, PSNBex would amount to £77.6bn in 2015/16, which would mean that the chancellor would overshoot by some £8bn the target of £69.5bn contained in his July budget.
He adds: “Furthermore, with the economy seemingly seeing a slowdown in growth in the third quarter, there is the risk that tax receipts could disappoint going forward. The Chancellor will obviously be hoping that the economy can kick on and is not hampered by global growth being held back by a marked slowdown in China and emerging markets.”