ECONOMY

Economic rebound improves health of UK public finances

The UK’s public finances were in better shape than expected in May, as the economic rebound boosted government receipts and limited spending.

Public sector net borrowing, excluding public sector banks, was estimated at £24.3bn in May, the Office for National Statistics said on Tuesday.

The figure was £19.4bn lower than in May last year, and was better than the £28.5bn forecast by the Office for Budget Responsibility, following lower than expected borrowing in April.

However, it was still the second highest borrowing figure for May since monthly records began in 1993, as the government continued to spend money on pandemic support schemes.

Public sector net debt, or the borrowing accumulated over time, was around 99.2 per cent of gross domestic product, the highest ratio since the 99.5 per cent recorded in March 1962.

Provisional estimates of central government receipts in May were £56.9bn, which is £7.2bn more than in the same month last year, reflecting the reopening of many businesses and improved turnover.

At the same time, central government bodies spent £81.8bn, down from the same month last year and lower than the OBR forecast as spending on subsidies to businesses and households declined compared with last year.

Chancellor of the Exchequer Rishi Sunak said that is was “important over the medium term to get the public finances on a sustainable footing”.

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