The ICAEW has warned of “economic storm clouds” over the fiscal outlook after the Office for National Statistics revealed that public sector net borrowing excluding public sector banks (PSNB ex) was £14.0bn, the third-highest May borrowing since monthly records began in 1993.
The ONS reportedly reduced its estimate of PSNB ex since its last publication by £0.9bn, bringing the full-year total to £143.7bn. Additionally, it reduced PSNB ex in FYE March 2021 by £7.8bn, bringing the full-year total to £309.6bn.
The report also showed that the public sector net debt excluding public sector banks (PSND ex) was £2,363.2bn at the end of May 2022, or around 95.8% of gross domestic product (GDP), showing an increase of £170.1bn or 0.5% of GDP compared with May 2021.
Commenting on the figures, Alison Ring OBE FCA, public sector and taxation director for ICAEW, said: “A slightly higher deficit than expected in this month’s numbers and a rising interest bill will not provide any comfort for the chancellor as he considers how to respond to public sector wage demands at the same time as attempting to build capacity for pre-election tax cuts next year.
“The economic storm clouds hovering over the fiscal outlook, as living standards go into reverse and inflation erodes the extent of planned investment in local communities, are likely to make the government’s ambition to level up the country even more difficult to achieve.”