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PwC comments on April's ONS public sector finances figures

24 May 2022

Hoa Duong, economist at PwC, says,

Despite additional revenue from increased National Insurance contributions from April 2022, the UK continues to spend more money than it received in taxes and other income. Today’s data shows April adding a further £18.6bn to the current government deficit, nearly 30% higher compared to March. It is also the third consecutive month of public sector deficit since January’s brief recovery.

“The increased need to balance the books means there will be further pressure on the Treasury to increase revenue and growing debate about the options, such as a potential windfall tax on energy companies.

“The prospect of double-digit inflation is driving fresh calls for the Chancellor to reduce households’ cost of living. This is tricky because any direct cash support would potentially push up inflation at least in the short term, exacerbating the risk of economic ‘stagflation’. 

“Therefore, we expect any government support in the coming months to be cautious and in the form of rebates rather than direct cash.” 

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