Britain’s recovering economy failed to boost the public finances in May as income tax receipts remained weak.
The government had to borrow £13.3bn in May to bridge the gap between its spending and its revenues, about £700m more than in the same month last year.
Britain’s official fiscal watchdog is expecting borrowing to fall about 10 per cent this year as the economy recovers and the government ploughs ahead with its austerity programme. However, during the first two months of the fiscal year, borrowing was 8.7 per cent higher than a year ago.
The monthly increase in the size of the deficit in May was partly explained by a £900m payment in May last year from a Swiss tax agreement, which was not repeated this year.
However, income tax receipts and national insurance contributions were also unexpectedly weak – down 1.4 per cent and up 1 per cent respectively.
But corporation and VAT and stamp duty taxes rose strongly and public spending remained under control, up just 0.3 per cent from a year ago.
Public sector net debt rose to £1,284bn, equivalent to 76.1 per cent of gross domestic product.
A Treasury spokesman said: “The government’s long term economic plan is working, delivering economic security for hardworking people . . . But the job is not yet done which is why we must continue to work through the plan that is building a resilient economy.”
“May’s public borrowing figures contain tentative signs that the coalition may be beginning to struggle to bring down the deficit in line with the fiscal plans,” said Samuel Tombs, an economist at Capital Economics.