December £4.0 billion current budget deficit
In December 2005 the public sector showed a deficit on current budget of £4.0 billion, compared with a deficit of £4.8 billion in December 2004.
Concentrating on one month in isolation can give a distorted picture as movements can be erratic. Focusing on the financial year to date generally provides a better overview. Between April and December of the financial year 2005/6, the public sector recorded a deficit of £23.4 billion. At the same stage of the 2004/5 financial year a deficit of £27.4 billion had been recorded.
More generally the public sector recorded deficits between 1991/2 and 1997/8 before moving into surplus in 1998/9. Since 2002/3 deficits have been recorded.
An alternative measure of the public sector fiscal position is public sector net borrowing. This additionally takes account of capital investment. In December 2005 there was net borrowing of £6.5 billion, which compares with £6.2 billion in December 2004. The Pre-Budget Report forecast for 2005/6 is net borrowing of £37.0 billion.
Public sector net debt, expressed as a percentage of gross domestic product (GDP), was 37.2 per cent at the end of December, compared with 35.2 per cent at end of December 2004. Debt peaked at 44.0 per cent of GDP in 1997, its highest since the mid 1980s. The debt ratio then fell steadily as public sector finances improved, reaching a low of 29.5 per cent in February 2002. Since then it has risen. The Pre-Budget Report forecast for the end of March 2006 is 36.5 per cent.
Net debt was £460.3 billion at the end of December, compared with £419.0 billion a year earlier. The Pre-Budget Report 2005 forecast net debt at the end of March 2006 is £456.6 billion.
Source: Office for National Statistics
Notes: The format summarises the public sector finances presentation in the Pre-Budget Report 2005 (HM Treasury, 5 December 2005). The statistics are used to monitor progress against the Government's key fiscal rules.