Government borrowing came in well below expectations in July, offering some short-term relief to chancellor Rachel Reeves as she prepares her autumn budget.
Public sector net borrowing totalled £1.1 billion last month, the Office for National Statistics (ONS) said – less than half the £2.6 billion forecast by economists and below the Office for Budget Responsibility’s (OBR) £2.1 billion projection.
The undershoot was driven by stronger self-assessment receipts and lower debt costs. July is a key month for income tax revenues, and self-assessment payments climbed to £15.5 billion, up £2.7 billion year-on-year. At the same time, debt interest payments stood at £7 billion, £1.5 billion lower than OBR estimates.
Overall, tax receipts rose by £6.1 billion to £77.6 billion, led by income tax and national insurance contributions. Public spending reached £92.1 billion, up £5.3 billion from a year earlier, with state pensions and day-to-day departmental costs continuing to rise alongside inflation.
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