Bank fines over exchange rigging deliver boost to public finances
- Credit: PA
Bank fines for rigging the foreign exchange market helped boost the public finances last month as George Osborne battles to meet annual deficit targets, official figures showed today.
Public sector borrowing, excluding the effect of bank bailouts, was £14.1billion in November, better than expected and £1.6 billion lower than in the same month last year.
Treasury coffers were swollen by £1.1billion in penalties from banks fined by the Financial Conduct Authority (FCA), figures from the Office for National Statistics (ONS) showed.
It meant borrowing for the April-November period representing the financial year-to-date was £75.8 billion, about £500 million lower than for the same period last year.
This is the first time in 2014/15 that the year-to-date shape of the public finances has been better than the same period a year before.
The Office for Budget Responsibility (OBR) is forecasting a 6% fall in the annual deficit for the year to March.
This was revised down earlier this month from a tougher target of 11% after disappointing income tax receipts.
- 1 Man with foot fetish jailed for sexually assaulting women
- 2 Nine Ipswich players who could follow Nsiala out the door this month
- 3 Van driver in his 20s dies in Elmswell crash
- 4 Road near A14 closed after 'serious' two-vehicle crash
- 5 'Versatile, hungry, athletic and technical' - McKenna on new signing Bakinson
- 6 See inside £1.25m bungalow for sale in one of Suffolk's 'poshest' villages
- 7 'I'm not bothered... he can go' - Pearson on Town target Bakinson
- 8 Town working on loan deal for Bristol City midfielder
- 9 Flood alert issued for parts of Suffolk coastline
- 10 Colchester sack Mullins as ex-Town defender takes interim charge of U's
The latest figures deliver a boost to the Chancellor as he tries to deliver the goal.
Banking fines, which have been spread over November and December but are all being counted in November’s public finance figures, have helped borrowing so far in 2014/15 to swing lower.
However the April-November borrowing figure is still only 0.7% lower than in 2013/14.
Samuel Tombs, senior UK economist at Capital Economics, said: “At last, some good news on the UK public finances. “Admittedly, this improvement partly reflected a one-off £1.1bn windfall from fines on banks for breaking FX market rules. But even stripping this effect out, the 3.4% annual reduction in borrowing is a significant improvement on the annual rises seen in previous months of this fiscal year. What’s more, borrowing in the previous months of this fiscal year was revised down by a cumulative £2.4bn.
“Nonetheless, borrowing in the remaining four months of this fiscal year will have to be a chunky £6bn or 27% lower than it was last year for the OBR’s new full-year borrowing forecast of £91.3bn to be met.
“Admittedly, January 2015 should see a £3bn or so boost to self-assessment tax receipts, which relate to the 2013/14 year to which some taxpayers deferred income to take advantage of April 2013’s cut in the top rate of income tax. But even accounting for that boost, borrowing will still have to be £3bn or 12% lower than last year – a tall order.
“What’s more, we continue to have our doubts as to whether even strong economic growth will bring about the much bigger reductions in public spending in future years as set out in the current fiscal plans. So while November’s public finance figures are a step in the right direction, the road to fiscal sustainability look set to be long and bumpy.”