Figures on government borrowing and retail sales are giving us a new insight into the state of the British economy today.
On the fiscal side, UK government borrowing hit its second-highest level for any May last month, as spending continued to outstrip tax receipts.
The UK borrowed £17.7bn in May to balance the books, £0.7bn more than in May 2024, the Office for National Statistics (ONS) has reported. That is only exceeded by May 2020, when the Covid-19 pandemic was gripping the country.
The ONS deputy director for public sector finances, Rob Doody, said: “Last month saw the public sector borrow £0.7bn more than at the same time last year, with only 2020, affected as it was by Covid-19, seeing higher May borrowing in the time since monthly records began.
“While receipts were up, thanks partly to higher income tax revenue and national insurance contributions, spending was up more, affected by increased running costs and inflation-linked uplifts to many benefits.”
The report shows that central government tax receipts increased by £3.5bn to £61.7bn in May, swelled by higher income from tax – including £1.9bn more on income tax, £800m in VAT, and £600m in corporation tax.
The recent increase in employers’ national insurance rates helped to lift compulsory social contributions by £1.8bn to £15.1bn.
Retail sales volumes in Great Britain dropped at their fastest rate since December 2023 last month, the ONS said.
The latest retail sales report shows that volumes fell by 2.7% month on month in May, and were 1.3% lower than a year ago. That is a worrying sign that consumer demand may have weakened last month.
The decline was apparently driven by a drop in food store sales volumes, after a strong rise in April.
The agenda • 9am BST: European Central Bank economic bulletin • 1.30pm BST: Philadelphia Fed manufacturing index • 3pm BST: EU consumer confidence report
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