PwC comments on June 2024 ONS public sector finances

Commenting on the latest ONS public sector finance data, Gora Suri, economist at PwC UK, says:

“The new government has a tricky task on its hands when it comes to the public finances. The latest figures reveal that the UK’s debt at the end of June 2024 was very close to the annual value of everything produced in the economy, standing at 99.5%.

“By committing to getting debt falling as a share of GDP, while ruling out an increase to any of the four main tax revenue-raisers, the government has given itself little wiggle room. Structural reform will be needed to help drive economic growth.

“One lever to get more fiscal headroom is for the government to convince the OBR that they can bring about a step change in productivity growth - a key determinant of long-term growth. This could have a big impact - according to the OBR, a 0.5 percentage point shift in their productivity growth forecasts could add or subtract more than £40bn in borrowing. However, given the OBR’s growth forecasts for the UK economy already look optimistic, an upwards revision seems unlikely.”