Public borrowing falls to £2.8bn; retail sales rise 2.6% on gadget grabbing

Osborne wasn't telling porkies in his Budget yesterday: public sector spending has indeed fallen, from £11.8bn last year to £2.8bn in February. Meanwhile, retail sales are finally edging up.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
After a crummy start to the year, high street retailers have enjoyed something of a February fillip. Sales of computers, tablets, and phones have driven up retail sales by 2.1% on last month (compared with analysts’ forecasts of a puny 0.5%) and 2.6% on the year.

Not only have sales volumes increased, but the amount consumers are spending on their purchases has crept up too – also by 2.6%. It’s a strong indication that the trend for mass discounting to shift stock at the expense of margins has come to an end.  

In February 2013, for every pound spent in the retail sector, 41p was spent in food stores, 42p in non-food stores (iPads galore), 5p in non-store retailing and 12p was spent on fuel. The weekly spend across all retailing was £6.3bn in February 2013 compared with £6.1bn in January 2013 and £6.1bn in February 2012. Could things be looking up for the beleaguered high street? Well, maybe for the likes of Carphone Warehouse and the Apple Store…

Meanwhile, over at the Treasury, all those spending cuts are finally paying off. The ONS reckons that public sector net borrowing, excluding interventions such as bank bailouts, fell to £2.8bn last month from £11.8bn a year earlier.

Osborne has been saved from having to approach the markets, cap in hand, for dosh because of two things. First, the £2.7bn in interest generated by the Bank of England from holding government debt – the eccentricities of finance mean that money can even be created from not having any money. And a further £2.3bn windfall from the 4G spectrum auction. The initial auction may have fallen £1bn short of expectations, but the money raised was still better than a poke in the eye.

Public sector net debt now stands at about 73.5% of GDP, adds the ONS, although Osborne has made it clear that this figure is set to rise this year. In his Budget statement on Wednesday, the Chancellor announced his intention to borrow a £60bn more over the next five years that originally planned, taking national debt to around 85% of GDP.

The figures may be little more than a temporary uptick for the UK economy, but it’s a vast improvement on the dismal January figures and a ray of economic sunshine in this ongoing winter of discontent. And dare we say it? Could this mean we are edging further away from the dreaded triple dip?

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