UK public sector borrowing was much greater than expected in April, as value-added tax receipts grew only marginally amid a softer consumer backdrop, official figures have shown.
Data published yesterday by the Office for National Statistics revealed underlying public sector net borrowing came in at £10.4 billion in April, up 13.1 per cent on the same month of last year and much greater than the £8.9bn projected by economists. VAT receipts in April, at £11.1bn, were up by just
0.2 per cent on the same month of 2016.
Scott Bowman, UK economist at consultancy Capital Economics, said: “The subdued revenue growth partly reflected weak VAT receipts growth – another sign that consumer spending growth has slowed recently.”
A survey yesterday from the CBI showed retail sales volumes this month have been up only marginally on a year earlier. Subtracting the proportion posting a fall from that reporting a rise, a net two per cent of retailers experienced an increase in sales volumes.
In April, in which trading appeared to be boosted by the later Easter, a net 38 per cent of retailers had reported a year-on-year rise in sales volumes.
Retailers signalled employment over the three months to May was down sharply on a year earlier. This was the second straight quarter of year-on-year decline in employment in the sector.
Alpesh Paleja, CBI principal economist, said: “Retail sales flattened out this month, as the bounce in April unwound. It’s clear households are increasingly feeling the pinch, as rising inflation pushes down on real earnings. Taken together with higher import cost pressures from a weaker pound, this is creating a challenging environment for retailers.”
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