Osborne under pressure as weak tax take hits government targets

Weak tax revenues from October have cast a dark shadow over George Osborne's autumn statement next week and suggest the UK government will struggle to meet its deficit reduction targets this year. Economists described the public finance figures variously as "terrible", "disappointing and very difficult" and "limit[ing] the chancellor's room for manoeuvre".

The poor data suggests Mr Osborne would need a huge improvement in tax revenues in the months ahead to achieve his goal of bringing total public sector borrowing down to £69.5 billion (€99 billion) in 2015-16.

In October, receipts of all the sizable taxes grew less than in previous months of this financial year, leaving the chancellor further behind his full-year target for borrowing. October is an important month for the public finances, because quarterly corporation tax payments are made in the month, but tax receipts from companies, incomes and spending were lower than needed to meet the government’s targets.

Total tax receipts were 1.8 per cent down last month compared with a year earlier. In the first seven months of the year they have risen 3 per cent. The Office for Budget Responsibility forecast that revenues would grow 4.1 per cent for the year as a whole. – Copyright The Financial Times Limited 2015