It’s the first time in three years that a surplus has not been recorded in July, traditionally a big month for corporation and tax receipts. Total borrowing for the year to July hit £36.8bn - £1.6bn more than last year, despite the improving economic climate.
The increase was largely the result of spending, suggesting that despite talking tough the Coalition is still struggling to get a handle on budgets. If George Osborne is hoping for the recent good vibes on growth to feed through to the government’s bottom line, it looks like he’s going to have to wait a bit longer.
Meanwhile, there’s a bit of a summer storm brewing out in the North Sea, at least according to industry body Oil & Gas UK. It predicts that output could fall by as much as 22% this year - the biggest annual slump on record - thanks to a combination of ‘natural decline’ and increased maintenance outages.
The association reckons that production this year will be between 1.2 and 1.4m BOEPD (Barrels of Oil Equivalent Per Day - gotta love that oil industry jargon), down from 1.54 BOEPD last year.
Output from many of the North Sea’s older wells is tailing off as they effectively run out, whilst ageing - and increasingly hard worked - rigs require more frequent maintenance shutdowns. Produciton stood at no fewer than 4m BOEPD in 2003, but has fallen every year since.
Even worse, the slowdown comes despite record investment of £13.5bn this year, suggesting that as what oil and gas there is left under the North Sea gets harder to extract, the cost and effort involved in getting at it rise.
But there’s also the question of lag time - investment in production this year won’t come fully on stream until next year at the earliest, so things may not be quite as bad as they seem. Production could recover the close to 2m BOEPD with a following wind, says Oil & Gas UK chief exec Malcolm Webb.
One the other hand, readers of a certain age who recall the dire prognostications that north sea oil was about to run out 20 years ago, might consider the fact that we’re still getting even this much oil out something of a minor triumph of human ingenuity.
But it seems pretty clear that the underlying trend in production is down, whilst the underlying trend in public borrowing remains up. Two more pressing reasons to get on with fracking - people of Balcombe, your country needs you.