Excuses, excuses!

Another month, another dire set of data on UK public finances.  (BBC story here).  July, normally a strong month for the fisc (because of payments on account for corporate and personal income taxes), saw a surprise new borrowing requirement of £600 million, compared to a surplus of £2.8 billion in the same month of 2011.  The main culprit is deemed (by the Treasury, at least) to be a 0.8% fall in revenues, though some might argue that the real problem is that the Government, for all its fearsome and confidence-shattering rhetoric, is failing abysmally to get any sort of grip on spending, which is still rising at a rate of more than 5% year-on-year.

As usual, there are supposedly mitigating circumstances.  The fall in corporation tax receipts may have been caused by the closure of a North Sea oil field because of a leak.  The Treasury is also suggesting that some tax payments on account may be recorded in August rather than July.  This is such a feeble get-out that you have to wonder if the Treasury's manual of excuses is getting worn out from overuse: there's no good reason why such payments would be tallied later on average this year than any other year, unless everyone was entranced by the opening ceremony for the Olympics.

Borrowing needs in each of the first four months of the fiscal year have been above prior year levels.  Achieving the Government's aim of reducing the annual borrowing requirement ever so slightly this year now looks a very tall order.  You wonder when the Treasury may start to realise that at some point a series of one-off factors, of the type it has been blaming for the shortfalls in recent months, might just start to look like a trend.

George Osborne, no fool he, is off on holiday somewhere, so it fell to one of his juniors, Chloe Smith, to repeat the increasingly untenable party line that "these figures show the importance of sticking to the government's plan".  Interestingly,  on the Labour side, someone actually seems to have looked at the data and realised that the usual bluster about brutal spending cuts is not actually true.  This month the party has offered the much more tenable view that efforts to cut the deficit had "choked off the recovery".

Truth to tell, the state of the UK economy is still a bit of a mystery.  It turns out that Q2 did not see as drastic a fall in GDP as first reported,  employment trends remain positive, and there are still expectations that the Olympic effect will give growth a boost in the current quarter.  The borrowing data are about the only unequivocally weak part of the overall picture right now.  Even so, the government's blinkered view of what it's actually achieving on the fiscal front becomes more ludicrous with every month that goes by.