Net borrowing for year 'could be lower than expected'

A tentative improvement in the UK's dire public finances during July fuelled hopes today of a smaller rise in borrowing than first feared this year.





The UK sank further into red in July with net borrowing of £3.8 billion over the month, although this improved on 12 months earlier when borrowing hit £6.1 billion, according to the Office for National Statistics.



The lower-than-expected sum brings borrowing for the four months of the year so far to £44.9 billion, with forecasts of £149 billion for the full year from the independent Office for Budget Responsibility (OBR).



Capital Economics UK economist Vicky Redwood said: "Should borrowing continue along the same path, it would undershoot the OBR's full-year forecast by around £3 billion.



But she added: "This still leaves borrowing at extremely high levels and does not reduce the need for a massive fiscal tightening over the coming years."



The latest figures come as Chancellor George Osborne warned this week of the danger of not sorting out the deficit amid discontent over the savage cuts planned in June's emergency Budget - although Labour has accused the coalition of gambling with the recovery.



July's figures are usually boosted by corporation tax and VAT receipts although the recession forced the UK to borrow during the month for the first time in 13 years in 2009.



Today's figures showed some signs of recovery, however with tax receipts of £49.7 billion - up £4.8 billion on a year earlier and the best July since 2008. The tax take was up 10.5% on a year earlier.



The ONS figures exclude the impact of financial interventions by the Government, which reduce borrowing overall due to factors including profit contributions from the part-nationalised banks.



A Treasury spokesman said: "Today's figures show receipts strengthening in line with the OBR's forecast.



"However, tax receipts remain below their pre-recession peak and the UK is still forecast to have the highest deficit in the G20 this year, which is why the Budget announced measures to bring borrowing down."



David Kern, chief economist at the British Chambers of Commerce, added: "These figures show an improvement compared to a year ago. They also highlight the UK's massive deficit and the major challenge in restoring stability to the public finances.



"British businesses understand that painful measures will be needed over the next few years to reduce the country's unsustainable deficit and they support the Government's focus on spending cuts rather than tax rises."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Trainee Vehicle Inspectors / Purchasers

£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...

Recruitment Genius: Vehicle Broker / Purchaser

£18000 - £45000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Executive - OTE £45,000

£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...

Recruitment Genius: Call Centre Manager - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: This innovative online car purc...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'