Growth in VAT and tax receipts eases some strain on public finances ahead of this year’s general election.
An improvement in the UK’s public finances at the end of last year will be scant reward for the Tory bruising expected at the upcoming general election, whenever it is announced. More tax receipts and lower inflation-related interest rate payments helped in bringing down overall borrowing in December to GBP 7.8 billion, almost GBP 4 billion below forecasts. While the Office of Budget Responsibility (OBR) expected this fiscal year’s borrowing to be at GBP 124 billion up to this point, the government has undershot this by GBP 5 billion so far and this will cheer Tory MPs clamouring for what they think will be vote-saving tax cuts. I think at this point though, given the current polling, that hope is a fool’s errand.
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