Week 47, 2012: UK Government Finances

Summary: UK public sector finance data for October was released today, showing an increase in the budget deficit compared to the same month a year ago. This was mainly fuelled by a continued drop in corporation tax income and increased expenditure on social benefits.

What does the chart show? The chart shows various components of the public sector finances for October of 2010 (in red), 2011 (in blue) and 2012 (in green), in billions of pounds.  The first category is the public sector budget deficit, which is total public sector expenditure minus total public sector receipts. The next two are for the two main categories of central government receipts (Income and Capital Gains Tax, and Corporation Tax).  The final two are categories of government expenditure - interest payments on government debt, and "net social benefits", which includes almost all spending.

Why is the chart interesting? October is an important month in public sector finances because it is when many quarterly payments become due, and is therefore a good barometer of the annual finances.  Much of the press coverage today has focused on the fact that the budget deficit has widened considerably when compared to October 2011.  The causes of this change are interesting, however; while both receipts from Income and Capital Gains Taxes and interest payments have remained largely the same since October 2010, Corporation Tax income has fallen by 15.3% and expenditure on net social benefits has increased by 11.1%.