Public finance update (for normal people)
Last month I wrote a lengthy piece about the disturbingly complex state of the public finances. Well, the latest month’s numbers – those for April – have come in.
The good news for the Chancellor is that they are a touch better than expected. The bad news for the rest of us is that they are no less complex. In fact, the size of the public finance report itself – the official document with all the numbers – has continued to swell. It’s now at 55 pages – a 60% increase compared with last year – and is increasing in size by a page a month.
However, there are some interesting lines in there – not merely in the most recent month’s deficit, which at £6.3bn was a couple of billion pounds lower than expected – but also for the previous fiscal year, 2012/13, which has been revised as more new data has come in on public spending. Remember that the Chancellor made great political hay of the fact that he was going to borrow less in 2012/13 than the previous year. Well, here’s where he now stands on the range of different borrowing measures we now have.
- PSNB: Public sector net borrowing – the traditional measure of the deficit. On this measure, the deficit is down this past financial year (12/13) by £19.1bn (or 20.5%) to £74.2bn.
- PSNBx: Stripped of the effects of financial interventions (eg the semi-nationalisation of banks like RBS and HBOS) the deficit was £85.1bn – down by 29.6% on the previous year (last month the figures put the decrease at 28.7%).
- PSNB ex RMPP: Strip out the impact of the Royal Mail Pension Plan, which has been added to the Government’s books, and the deficit was £113.1 – down by 6.5% (last month had it down by 5.6%)
- PSNB ex RMPP and APF – stripping out the effect of the extra money funnelled into the public finances from the Bank of England’s Asset Purchase Facility (eg profits from quantitative easing): deficit of £119.5bn – down 1.2% on the previous year (was previously a mere 0.3% fall).
- PSNB ex SLS – this is a variant of the deficit which, on top of all of the above excludes the influx of profits from the Special Liquidity Scheme. On this measure, the deficit was 900m higher in 2012/13 than the previous year (that is at least a smaller increase than the £2bn quoted last month).