Copy article

Public sector finances July 24

ended 21. August 2024

Public sector borrowing in July — the difference between public sector spending and income — was £3.1 billion in July 2024, £1.8 billion more than in July 2023 and the highest July borrowing since 2021, according to official data published this morning. Other key findings below. Any thoughts on what this could mean for the upcoming Autumn Budget and what it says about the state of the UK economy, send them across ASAP as this story is breaking.

  • Self-assessed income tax (SA) receipts in July 2024 were £12.9 billion, £1.1 billion more than in July 2023; however, because of the possibility of delayed July payments, we recommend considering July and August SA receipts as a whole when making year-on-year comparisons.
  • Borrowing in the financial year to July 2024 was £51.4 billion, £0.5 billion less than in the same four-month period a year earlier but the fourth highest year-to-July borrowing since monthly records began in January 1993.
  • Public sector net debt excluding public sector banks was provisionally estimated at 99.4% of gross domestic product (GDP) at the end of July 2024; this was 3.8 percentage points more than at the end of July 2023, and remains at levels last seen in the early 1960s.
  • Excluding the Bank of England, debt was 91.9% of GDP, 4.9 percentage points more than at the end of July 2023 but 7.5 percentage points lower than the wider debt measure.
  • Public sector net worth excluding public sector banks was in deficit by £739.9 billion at the end of July 2024, a £123.3 billion larger deficit than at the end of July 2023.
  • Central government net cash requirement (excluding UK Asset Resolution Ltd and Network Rail) was £29.6 billion in July 2024, £19.6 billion more than in July 2023; in July 2024, the redemption of an index-linked gilt increased central government net cash requirement by around £14.5 billion.

2 responses from the Newspage community

Copy all

Copy

Editor
Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
Recent data on UK public sector borrowing paints a complex picture for investors and policymakers alike. Public sector net debt rose to 99.4% of GDP, reminiscent of the early 1960s. The £3.1 billion borrowing in July 2024, the highest for this month since 2021, signals a widening fiscal deficit that could have significant implications for the Autumn Budget.

From an investment perspective, this increase in borrowing, despite higher self-assessed income tax receipts, suggests underlying structural imbalances in the UK economy. The government may face pressure to implement fiscal tightening measures, such as tax hikes or spending cuts, to address the £22 billion shortfall in public finances. Additionally, the substantial increase in the central government net cash requirement, driven by gilt redemption, underscores the complexities of debt management for this government. Investors should be prepared for potential volatility in sectors heavily reliant on government spending.
Copy

Platinum
John Choong
Head of Equities and Markets at Interpretiv
July's borrowing figures paint a gloomy picture but may seem worse than they actually are. Although borrowing figures were way above the OBR's estimate of £0.1bn, narrowing Reeves' wiggle room for her October Budget debut, it hasn't taken a number of factors into account. With economic heavyweights like JPMorgan revising growth forecasts upward, the OBR might follow suit, potentially gifting Reeves an unexpected treat before Halloween, as higher economic growth would result in higher tax receipts. Add in the ONS's mention of delayed self-assessment taxes, and next month's figures could be the fiscal equivalent of finding loose change in the couch cushions. This might just give Reeves enough breathing space to avoid a slash-and-burn tax hike before Halloween.