Overall public sector net borrowing (PSNB) was £15.86 billion in February, well above the market consensus and the highest February reading since monthly records began in 1993. This followed a significantly larger revised £9.10 billion surplus in January but compared with a year ago, borrowing was still up fully £9.65 billion, largely because of substantial spending on energy support schemes. Excluding public sector banks (PSNB-X), the shortfall stood at £15.86 billion versus £6.20 billion in February 2022.

Central government's current receipts were £77.8 billion, a 6.8 percent rise compared with February last year. Over the same period, current expenditure rose by 13.0 percent to £80.8 billion, largely because of the energy support schemes. For the financial year to date, the PSNB-X stands at £132.2 billion, a £15.5 billion increase from the same period a year ago and the third highest in three decades. Public sector net debt was £2,507.3 billion or around 99.2 percent of GDP, with the debt-to-GDP ratio at a level last seen in the early 1960s.

Today's update underlines the very limited wiggle room left for government policy as it tries to reduce borrowing and at the same boost growth ahead of a probable general election next year. However, it also puts the UK ECDI at 18 and ECDI-P at 13, both measures indicating modest outperformance by economic activity in general.

Overall net borrowing is seen at £10.0 billion after a £6.24 billion surplus in January.

The public sector net borrowing requirement (PSNB) is the difference between the sector's receipts and expenditure and so provides a simple measure of government fiscal policy. In response to the global economic crisis in 2008/09 the UK government introduced a number of measures designed to show the underlying state of public sector finances by omitting temporary distortions caused by financial interventions. It bases its fiscal policy on these measures. To this end, the underlying gauge of government borrowing watched most closely by financial markets is the PSNB-X which takes overall net borrowing (PSNB) but excludes public sector banks.

Changes in public sector finances can be used to determine the thrust of the government's fiscal policy. Generally speaking when the government has a rising deficit (or falling surplus) it is loosening its fiscal stance with a view to boosting economic activity. When its deficit is falling (or surplus rising), fiscal policy is being tightened in order to slow economic growth. However, sometimes changes in government financial positions can be due to factors outside of the government's control and do not signal an explicit shift in policy. This means that great care is needed in interpreting the data.