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PwC Comments on October 2021 ONS public finances figures

19/11/21

Hoa Duong, economist at PwC, says,

"Public finances are not in a much stronger financial position than last month according to today’s data, with borrowing cut by about one-eighth. The end of Government subsidising the furlough scheme and Stamp Duty holiday will have contributed to this marginal reduction. 

"People are expected to spend more for a special Christmas this year and the ‘Golden Quarter’ for retail starting in October has seen consumers pushing spending forward. Yet we expect a low likelihood of significantly increased income from taxes, such as VAT and customs duties, as a result of concerns over surging inflation and trade friction.

"It will be a tricky battle between ‘splurge and squeeze’ in spending for the Chancellor in terms of following through with the levelling-up agenda promised in the Spring Budget. As of October, the public sector net debt stood at £59bn, which is about 132% of the OBR’s provision for the month according to its revised forecasts last month.

"This leaves even less breathing room in the accounts for the Chancellor when it comes to pursuing the levelling-up agenda, given the disruption caused by the pandemic. This challenge will be worsened by the risks of polarised and unequal regional recovery."

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