Government borrowing below forecasts in June

The government borrowed pounds 3.9bn last month to cover the short- fall between what it spends and raises in taxes, the Treasury said yesterday. The figure was below City forecasts, completing a week of unexpectedly upbeat economic indicators.

The Treasury also published its latest round-up of 35 independent economic forecasts, which showed growing confidence in a non-inflationary recovery.

The independent forecasters on average expected the economy to grow by 1.6 per cent this year, up from a forecast of 1.5 per cent in the previous month. This was above the Budget forecast of 1.25 per cent growth, but still below the Treasury's unpublished internal May forecast of 1.8 per cent.

Independent forecasters were also more confident that inflation would stay low, cutting the average forecast for inflation in the last three months of the year from 2.5 to 2.4 per cent.

The average forecast for the public sector borrowing requirement in 1993/94 has also been cut to pounds 47.6bn. The Treasury warned it was too early to conclude from the low June PSBR that the figure for the year as a whole would be below the pounds 50bn budget forecast, in part because the PSBR is so erratic.

The cumulative PSBR in the first three months of the financial year was pounds 13.2bn, up from pounds 10.7bn in the same period last year.