Pensions move brings Treasury boost
The Treasury saw a public sector net surplus of more than 16 billion pounds in April following the transfer of Royal Mail pensions
The transfer of Royal Mail pensions into the public sector has given the Government's finances a one-off boost, offsetting a larger-than-expected surge in borrowing last month.
The Treasury achieved a £16.5 billion public sector net surplus in April - that is revenues were higher than spending - after a £28 billion lift from the value of assets transferred from the Royal Mail pension plan. This compares to £9.1 billion borrowing in April last year.
But excluding the one-off Royal Mail impact, the Government actually recorded public sector net borrowing, excluding financial interventions such as bank bailouts, of £11.5 billion - £3 billion higher than City forecasts.
Elsewhere, Chancellor George Osborne's deficit-busting plans were helped as total borrowing for 2011/2012 was revised down by £1.6 billion to £124.4 billion, meaning a reduction of more than £12 billion over the year.
A Treasury spokesman said: "Despite the challenges the recovery is facing from the eurozone and elsewhere, the Government is making good progress in dealing with the deficit." He added that the £28 billion one-off boost to the public finances from the Royal Mail pension assets would be used to pay down debt rather than fund extra spending.
Tax and spending watchdog the Office for Budget Responsibility has forecast total public borrowing for 2012/2013 of £120 billion, or £92 billion when the Royal Mail pension plan is taken into account.
However, as April is the first month of the fiscal year, analysts said it was too early to comment on progress made towards that target.
But Howard Archer, chief UK and European economist at IHS Global Insight, said the underlying picture in April "appears weaker".
Tax receipts on production, income and wealth were 0.9% lower as weakened economic growth started to take its toll, while spending still rose 3.8% year on year.
Mr Archer added: "The Chancellor needs the economy to return to growth sooner rather than later if he is to achieve his fiscal targets for 2012/13 and obviously much will depend on events in Greece." Net debt, excluding financial interventions, was still over the £1 trillion mark, equal to 64.8% of GDP.
