Yahoo Finance Tax doldrums put deficit on the rise again
Theresa May is heading into the election with the deficit on the rise again after figures showed a sluggish economy hitting tax receipts.
Borrowing jumped unexpectedly to £10.4 billion last month, up £1.2 billion from a year earlier and the worst April for the public finances since 2014.
Total receipts rose by 3.9%, but that was outpaced by a 5.9% rise in government spending, driving the deficit upwards.
The biggest culprits were VAT receipts, flat on last year at £11.1 billion, as well as a falling stamp duty take. Income tax and corporation tax barely budged on last year despite the economy’s comparative resilience since Brexit.
Pantheon’s senior UK economist Samuel Tombs said the figures added to evidence of tougher times ahead. “The figures suggest that the slowdown in GDP growth in the first quarter won’t be just a blip.”
The Office for Budget Responsibility predicts overall borrowing will rise to £58.3 billion in the current financial year.
There was better news on the deficit in the year to March, which was revised down to £48.7 billion, £3 billion lower than the OBR originally forecast.
