How borrowing can be up, and down

"Britain's public sector finances improved in October, giving the Chancellor of the Exchequer George Osborne more wiggle room ahead of his Autumn Statement"—The Financial Times

"Between April and October, government borrowing was £64.1bn, an increase of £3.7bn from the same period last year"—The BBC

Both of these statements are correct, but they measure government borrowing over different periods.

Public Sector Net Borrowing (PSNB) in October 2014 was £200 million lower than it was in October 2013. But when measured from April to October, borrowing was £3.7 billion higher compared to the same period in 2013.

Government borrowing figures can be hard to fathom. We have guides to government debt and deficit, and we've written in the past about the difference between the two.

Which figure to use

Government spending can change dramatically from month to month through changes in short-run economic circumstances—for example, a temporary rise in unemployment.

These spending changes are only expected to last for a short time. Measuring the change in borrowing over a longer period reduces the influence of these temporary changes, so the April-October figure gives a better idea of the change in government borrowing.

Another measure

The Central Government Net Cash Requirement (CGNCR) is how much money the government needed to borrow in order to finance its spending. This was £20.3 billion higher in April-October 2014 than it was during the same period in 2013.

The two measures 'count' government spending differently: The PSNB counts spending as taking place when a service is used or something is sold. The CGNCR only counts spending once money actually changes hands.

While the CGNCR reflects current government cash requirements (which in turn relate to previous spending decisions), PSNB traces spending decisions that might not have been charged for. This makes it a more suitable measure of how the government is managing its finances.