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
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
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

Opilio Recruitment: Field Marketing Manage

£25k - 40k per year + Benefits: Opilio Recruitment: A fantastic opportunity ...

Recruitment Genius: Domestic Gas Breakdown Engineers

£28000 - £35000 per annum: Recruitment Genius: Domestic Gas Breakdown Engineer...

Recruitment Genius: Domestic Gas Breakdown Engineers

£28000 - £35000 per annum: Recruitment Genius: Domestic Gas Breakdown Engineer...

Opilio Recruitment: Product Development Manager

£40k - 45k per year + Benefits: Opilio Recruitment: We are currently recruit...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas