The British Chambers of Commerce (BCC) has warned against complacency following the publication of December 2015’s public sector finance figures.
Published last week by the Office for National Statistics (ONS), the statistics revealed that public sector borrowing, excluding public sector banks, was £4.3bn lower than 12 months earlier.
The current financial year to date, running from April to December 2015, has also seen public sector net borrowing, excluding public sector banks, at £11bn lower than the same period in 2014.
For good measure, public sector net debt, excluding public sector banks, was 81 per cent of GDP at the end of December 2015.
David Kern, the BCC’s Chief Economist, said: “After November’s setback, the marked improvement in December makes it likely that public finances will show an overall improvement in the current financial year, and there is a chance that the OBR’s forecast made in the Autumn Statement will be met.
“There is still no room for complacency, and the task ahead remains huge. The weaker financial sector and depleted oil and gas output mean that the UK’s ability to generate tax receipts has experienced a long-term decline, and we must adjust our public spending plans to this reality and do more to boost our tax base.”
The BCC has also said that, while falling retail sales figures are a cause for concern, they shouldn’t be exaggerated.
Figures published last week by the ONS showed that December’s retail sales volumes were down by one per cent on the month – but up by 2.6 per cent on the year.
Last month’s average store prices also fell by 3.2 per cent compared with December 2014.
Mr Kern said: “The fall in retail sales in December was disappointing, and although annual growth in sales at 2.6 per cent is still reasonably healthy, it is still a marked slowdown compared with previous months.
“Since average store prices have now recorded 18 consecutive months of year-on-year declines, these figures reinforce our view that inflation will remain close to zero in the near-term.
“However, it is important not to exaggerate the gloom, as recent employment figures show that there are still areas of strength in our economy.”