Osborne close to meeting targets after February borrowing data

Public sector net borrowing decreased in February as tax receipts from high-earners bonuses finally materialised, bringing the Chancellor closer to meeting his fiscal targets.

Public sector net borrowing, excluding the public sector banks (PSNBx), decreased to £6.9bn from £10.4bn one year ago, according to the Office for National Statistics (ONS), thanks to a significant improvement in tax receipts

Analysts had pencilled in a figure of £8.5bn.

That led to a 9.7% decrease in PSNBx for the first 11 months of the fiscal year to £90.6bn.

The chief factor behind the above was a pick-up in self-assessed tax payments from high-earners who last year deferred their bonuses to take advantage of the cut in the top rate of income tax to 45% from 50%.

As of the end of February 2015 general government gross debt was £1,588.3bn or 85.8% of gross domestic product.

The above is good news for the Chancellor. It points to him likely being able to at least meet, and very possibly undershoot, his reduces fiscal targets for the fiscal year 2014/2015, Dr. Howard Archer, chief UK+European economist at IHS Global Insight said.

“February’s marked improvement in the public finances means that the Chancellor may well undershoot the modestly downward revised 2014/15 target of £90.2bn (trimmed from £91.3bn) for Public Sector Net Borrowing excluding banks that was contained in Wednesday’s budget.

“Any good news on the public finances is obviously helpful for the Conservatives as May’s general election draws ever closer, Dr. Archer added.