Published: Tue, August 22, 2017
Business | By Max Garcia

United Kingdom public finances notch up first July surplus since 2002

For the four months so far this year, though, public sector net borrowing - which leaves out support for public sector banks - was £1.9bn higher than last year's at £22.8bn.

The ONS numbers, published today, show a surplus of £0.184bn against expectations that the government would borrow around £1bn.

That is despite an increase in tax receipts last month which helped deliver a small surplus of £200 million.

Receipts from self-assessed income tax increased by £0.8bn to £8.0bn year on year in July, the the highest level on record.

He said that last year's deadline for payments fell on a weekend and instead bolstered August figures.

About a third of the total government debt stock is linked to inflation, which stood at 2.6% in July, down from May's peak of 2.9%, but still significantly above the Bank of England's 2.0%.

As well as the self-assessed income tax, the Treasury also received a boost from a 5pc climb in value-added tax revenue.

At the end of July, public sector net debt was GBP 1,758.3 billion, equivalent to 87.5% of gross domestic product.

Public finances are likely to be hampered by a struggling United Kingdom economy and higher interest debt payments over the coming months, but Howard Archer, chief economic advisor for the EY Item Club, said Chancellor Philip Hammond is likely to have some "wiggle room" by the time he delivers the autumn budget. "That is why we have a clear fiscal plan to reduce our debts and build a stronger economy for every household".

United Kingdom public sector borrowing produced a first surplus in July for 15 years thanks to a one-off jump in self-assessment tax receipts. "As such, we continue to doubt that the Chancellor will pare back the fiscal consolidation planned for the coming years", he said, noting that if this trend continues borrowing will be well below the OBR's Budget forecast of £58bn at about £49bn.

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