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Oliver Sutton

Public Sector Net Borrowing

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Is this a Treasury number or an ONS number? Hard to know what the truth is given that they couldn't even agree whether the budget deficit for 2011-12 was £90bn or £185bn.

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Is this a Treasury number or an ONS number? Hard to know what the truth is given that they couldn't even agree whether the budget deficit for 2011-12 was £90bn or £185bn.

ONS

For the financial year to date 2013/14, public sector net borrowing excluding temporary effects of financial interventions and also excluding the effects of the transfer of the Royal Mail Pension Plan and the transfers from the Bank of England Asset Purchase Facility Fund was £84.0 billion. This was £2.0 billion lower than the same period in 2012/13, when it was £85.9 billion.

And the UK will be posting a surplus by 2018 laugh.giflaugh.giflaugh.gif

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So 1.9% 'growth' driven by 120bn borrowing (84bn extrapolated to full year) and net 5.1% of GDP imported.

BOE say 2.8% magic growth next year so presumably more borrowing and importing.

Personal spending increasing at a higher rate than incomes and savings rates dropping.

This truly is an economic miracle.

If tapering leads to higher rates, things in the UK are going to get a bit tricky.

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Monthly figures are up and down like a tarts knickers.

What is important is the trend.

From the BBC in November :

Seven months into the current 2013-14 tax year, the deficit, excluding the cost of bailouts and the effect of the Royal Mail pension transfer, is £64.8bn, down 8.2% compared with the same period last year.

http://www.bbc.co.uk/news/business-25030293

Even with the worsening figures in November they are still on target to reduce significantly compared with last year.

The key issue is whether we are tightening better or worse than other economies, not the absolute numbers.

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PSNB ex financial interventions was £16.5bn in November (£15bn expected).

PSNB inc financial interventions was £14.8bn (£13.4bn expected).

This wasn't a big miss. The forecast figure of £6.6bn quoted in the OP (from ForexFactory?) is incorrect.

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I have mentioned this before......Current account is failing badly on invisibles. If, indeed, we were running current account deficits then we would be getting more and more in debt to the rest of the world. Nope we have joined China and Russia as a country with net foreign assets from being in debt back in 2009. Pure magic isn't it, perhaps its all those oligarch's importing their wealth to London. Anyway we have a £180 billion surplus at the last count, the US is the worst debtor as expected (amounts arec in local currency so you have to account for Mickey Mouse currency in some of the smaller countries.

http://data.worldbank.org/indicator/FM.AST.NFRG.CN

Edited by crashmonitor

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By assets do they mean loans

I'm sure most of the assets are foreign debtors.....still that would also be the case in 2009 when we were in deficit. Opening liabilities plus an eternal current account deficit equals closing assets makes no accounting sense.

Edited by crashmonitor

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I'm sure most of the assets are foreign debtors.....still that would also be the case in 2009 when we were in deficit. Opening liabilities plus an eternal current account deficit equals closing assets makes no accounting sense.

It can make sense. You're confusing stocks with flows.

The relevant metric for the Balance of Payments is the Net International Investment Position (NIIP) which is currently in surplus according to today's BoP release (http://www.ons.gov.uk/ons/dcp171778_347294.pdf).

According to the ONS the UK had net foreign assets of £98bn at end Q3 2013. However this figure bounces around a lot because it's the difference between two very large numbers:

UK ownership of foreign assets: £9,775bn

Foreign ownership of UK assets: £9,677bn

It's possible to run a current account deficit for years and still show a positive NIIP if the aggregate value of UK-held overseas assets rises relative to the value of UK assets held by foreigners. This can (for example) be caused by a fall in the exchange rate which will increase the sterling value of UK holdings abroad.

Having said that I'd caution that there's a great deal of uncertainty in the periodic valuation of these assets, particularly where direct investment is concerned. Take them with a large pinch of salt.

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