It is not often that you see the effects of tax changes quite so explicitly in the big figures for the public finances. Normally these things happen well below the waterline rarely breaking the surface. A big impact however is exactly what we have seen recently. Let me explain why.
In April to some people’s surprise public sector net borrowing was £11.5bn up on a year earlier when it was £9.5bn. That was disappointing breaking the pattern of monthly deficits being lower than their level a year earlier. It was a significant reversal.
It was particularly disappointing given the context. Stronger growth would normally be expected to bring the budget deficit down more rapidly by boosting revenues and reducing outlays on unemployment and other benefits. A rising...
