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."
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 2 Greece debt crisis explained: A history of just how the country landed itself in such a mess
- 3 People all over the world are getting semicolon tattoos to draw attention to mental health
- 4 Greek debt crisis: Yanis Varoufakis's funniest (and most memorable) quotes
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Greece debt crisis explained: A history of just how the country landed itself in such a mess
German conservatives are destroying Europe with austerity, says economist Thomas Piketty
Man dies instantly after shooting firework from top of his head
Isis schoolgirl Amira Abase who fled London to join terrorists in Syria mocks victims of Tunisia massacre
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
£20000 - £40000 per annum: Recruitment Genius: Trainee Vehicle Inspectors / Pu...
£18000 - £45000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...
£25000 - £50000 per annum: Recruitment Genius: This innovative online car purc...