UK public finances improvement to stall temporarily in September

The monthly evolution of the budget deficit is highly erratic. In the first three months of the fiscal year, the PSNBex measure fell by a total of £6bn compared to a year earlier but then in the following two months was £1.6bn worse. So the year-to-date (August) improvement is £4.4bn. However, for the OBR projections for the full year to be met, the improvement would have to have been twice that. 

The quality of the data on some of the key inputs is poor until quite late in the year so we should not be surprised at this volatility. Moreover, this also means that we should be cautious in interpreting the year-to-date performance as implying that the full year projection will be missed. 

"For September we predict that the deficit will be the same as a year earlier at £11.0bn," notes Societe Generale.