There have not been too many occasions in recent years when the ONS number crunchers have delivered economic data markedly better than City forecasts.
So let’s allow Jeremy Hunt to enjoy the moment today. The £7.8 billion borrowed by the government in December was the lowest for the month since 2019, admittedly a pretty low bar to set given what has come since then. But it was well below the £11.4billion pencilled in by City scribblers.
More importantly borrowing is now on course to undershoot the OBR’s projections by £5 billion in the current financial year, and much more next year. In the time honoured phrase, that gives the Chancellor “wiggle room” to deliver crowd pleasing tax cuts of up to £20 billion when he rises to his feet in the Commons on March 6, according to the commentators.
But let us not get too carried away.
There is a “glass half empty” way of looking at today’s numbers too. The state is still having to borrow more than £100 billion a year to keep the show on the road.
The now £2.69 trillion of debt, expressed as a proportion of economic output, rose another 1.9 percentage points to 97.7% in the year to December. That is the highest since the early 1960s.
But then the figure was falling rapidly from the monumental peaks of the Second World War at a time of robust economic growth.
By contrast over the past two decades it has trebled from around the 30% mark at a time of sluggish economic activity. It leaves the public balance sheet very stretched if, God forbid, another crisis on the scale of the pandemic or the Ukraine war comes along.
Jeremy Hunt is obliged by the necessities of the political cycle to deliver the biggest vote winning package of tax cuts he can in March.
But long after the dust has settled on the election result later in the year he will be judged on whether he delivered a responsible and sustainable Budget in the long-term interests of the country.
