By Simon Miller
The UK government's plans for cutting the deficit took a blow today as figures revealed that public sector borrowing was up from a year ago.
Public sector net borrowing was £14.4bn in June 2012 - £0.5bn higher net borrowing than in June 2011.
The current budget deficit was £13bn in June 2012, a rise of £0.6bn from the year previously.
However, public net borrowing for 2011/12 was down £0.3bn on forecasts at £125.7bn while public sector net debt was £1,038.3 billion at the end of June 2012, equivalent to 66.1% of gross domestic product (GDP).
Even so, the Office for Budget Responsibility said comparisons between public sector net investment and net borrowing for the April to June period were dominated by the £28bn transfer received by government from the assets of the Royal Mail pension plan in April.
"Although, this transfer was foreseen by the OBR and included in their forecast, the size of the transfer is sufficient to significantly distort comparisons between the year to date and the full year. For this reason, the table includes public sector net investment and net borrowing figures excluding the Royal Mail pension transfer. These figures show that, for the year to date, public sector net borrowing has risen by 11.7 per cent, which compares to a forecasted 4.6 per cent decline for the full year," the OBR said.
The figures come the day after the International Monetary Fund (IMF) warned that the UK needed to prepare a 'plan B' as the recovery stalls.
In its economic update, the IMF said that post-crisis repair and rebalancing of the UK economy was likely to be more prolonged than initially envisaged.
It added: “Confidence is weak and uncertainty is high. Looking ahead, the economy is expected to grow modestly, but with current policy settings, the pace will be insufficient to absorb significant slack in the economy, raising the risk of a permanent loss of productive capacity.”