Government borrowing soared to its highest level for three years in April, despite beating forecasts and cutting annual public borrowing by more than initially expected for the entire year.
Public sector net borrowing, excluding public sector banks, hit £10.4 billion last month, according to the latest figures from the Office for National Statistics released on Tuesday. This was up by £1.2 billion from April 2016.
Public sector net debt stood at £1.72 trillion, the equivalent of 86 percent of GDP, an increase of £114 billion on April 2016.
However, revised figures showed that public sector net borrowing actually fell by £23.4 billion for the full year ending March 31 to £48.7 billion, totalling the lowest figure since the start of the financial crisis. It had been expected that the government would miss this forecast, but higher than expected VAT receipts since January allowed the government to meet their target.
Retail sales figures
Figures from the Confederation of British Industry were less positive however, showing a decline in retail sales growth in May after surging in April. Its monthly retail sales balance fell back to +2 in May from +38 in April, a four-month low and below forecasts for a reading of +10.
“It’s clear that households are increasingly feeling the pinch, as rising inflation pushes down on real earnings,” CBI economist Alpesh Paleja said.
“Taken together with higher import cost pressures from a weaker pound, this is creating a challenging environment for retailers.”