UK borrowing climbs in June: what the economists say Sam Hill, RBC Capital On the face of it looks as though the borrowing is running way ahead of where it should be� The automatic stabilizers of lower tax growth and stubbornly high spending on benefits are preventing the budget target being met. Where the problem will come is if OBR in November decide that growth forecast for the next two years is looking too optimistic, you're looking at a deterioration in the structural aspect of the budget, so as growth forecast is revised down, you transfer more of the deficit to structural rather than cyclical. So even if you allow automatic stabilizers to play their role, this will still leave you with a bigger structural deficit than if you had had bigger growth. Philip Rush, Nomura Altogether not too surprising, particularly on the cash side. You've got the PSNCR which has improved a little bit... and the CGNCR was bang in line with what we expected, so there isn't really any news related to the gilt remit at least. On the borrowing side, we are tracking something that at face value would suggest the government may miss its fiscal target this year, but it is very early days and a lot can happen between now and the autumn statement. The growth outlook has clearly weakened relative to where it was in March and that naturally means that the outlook for receipts is probably going to be rather less impressive than they had hoped at the time. More bad news for the Government comes in the form of another poor set of UK public finance figures. Borrowing remains on course to overshoot the OBR's full-year forecast by a long way - on current trends, by about 20 billion pound. Government spending growth slowed in June, but revenues growth remained pretty sluggish. Admittedly, the data have been a bit volatile recently, in part due to bank holiday effects. Nonetheless, the trend has been worsening for a few months now and the full effect of the recent return to recession on the public finances is probably yet to be seen. Accordingly, we still think that concerns about the UK's fiscal position are likely to build. James Knightley, ING The UK public finance data for June show that government borrowing has come in higher than expected with previous monthly borrowing also revised up. In terms of the breakdown, income tax receipts are down on the same period last year, as are corporation tax receipts, but VAT receipts are up. Consequently, it is clear that the recession is leading to a worsening of the UK's underlying fiscal position and raises more question marks over the effectiveness of the government's austerity measures. Victoria Clarke, Investec The headline is disappointing when you couple that with the back revision as well. It is still early days for the fiscal year, of course, but even with today's figures meeting the OBR's forecast for the fiscal year 2012-13 looks a bit more challenging. It looks as thought the economic backdrop is certainly weighing on receipts and perhaps to an extent making it more difficult to bring down those spending figures as well.