Each month, UK government borrowing is either up, or down. It is difficult to draw any conclusions, because so many things have an impact on the data. But public borrowing figures released in April are different. They tell us the scale of government borrowing over the course of the previous financial year, so they are important.

For 2012/13, public sector net borrowing (PSNB ex) was £86.2 billion. That was £34.7 billion less than in the previous financial year and slightly less than the OBR had forecast.

So that sounds encouraging.

Just remember, however, that the OBR revised its forecast for borrowing up during the course of the year. So the final figures may be less than was estimated a few weeks ago, but they are far more than was originally estimated.

Alas, one-offs distorted the figures. After removing the effects of the transfer of the Royal Mail Pension Plan and the transfers from the Bank of England Asset Purchase Facility, public sector net borrowing was £120.6 billion, just a tiny £0.3 billion less than last year. Remember, the chancellor decided to use profits made by the Bank of England from the interest it earned from buying bonds, to reduce debt. But the Bank of England had long maintained it needed to hold onto these profits to fund any losses that may accrue when QE is reversed.

The OBR is not forecasting a fall in borrowing this year. Frankly it has good reason to be so pessimistic. Only a rise in tax receipts via increased VAT revenue accruing from greater spending, or an increase in income tax because workers are earning more, or indeed more are employed can achieve that.

© Investment & Business News 2013