UK budget deficit trend should continue to improve

The public finances have made a good start to the year. In the first two months of the fiscal year, the cumulative deficit is £5.1bn below the comparable figure a year earlier. Of course it is far too early in the year to discern any meaningful trends in the data. Note that the latest OBR forecast for the full fiscal year deficit is £69.5bn. That implies a rate of improvement compared to last year of £1.2bn per month in the remaining ten months of the fiscal year, compared to the £2.5bn per month in the first two months. 

"We expect an improvement of £1.5bn in the June data which would result in a PSNBex figure of £8.9bn," said Societe Generale in a report on Monday.