Is a fiscal crisis quietly brewing?

On the face of it, last week’s fiscal figures suggested that the public finances are still not benefitingfrom the recovery’s strength. Indeed, if the trend in the first three months of this fiscal year relative tolast was maintained, then the deficit would exceed the OBR’s full-year forecast of £96bn by £18bn.

However, the annual comparison looks bad right now partly because tax receipts weretemporarily boosted a year ago. And while the recent stagnation of pay has also played a role, apick-up is in prospect later this year. So, with signs too that other tax receipts are already benefitingfrom the economy’s strength, borrowing could still come in below the OBR’s estimate this year.