Chancellor Jeremy Hunt remains unaffected by £7.5bn borrowing boost.

Chancellor Jeremy Hunt remains firm on the need for disciplined spending, despite borrowing for the first quarter of the financial year coming in £7.5 billion lower than expected.

Hunt faces pressure for pre-election tax cuts, and economists at Investec suggest that achieving this task would be challenging but not impossible. The Office for National Statistics reported that borrowing, which represents the gap between the government’s tax revenues and expenditure, fell to £18.5 billion in June. This figure is £400 million lower than the previous year, but still the third-highest level for the month since records began in 1993.

Economists had anticipated borrowing to rise to £22 billion. However, for the April-June quarter, borrowing stood at £54.4 billion, £12.2 billion higher than the previous year but £7.5 billion less than what the Office for Budget Responsibility (OBR) had predicted in March.

Despite a recent decrease in inflation, which provided a boost for Hunt, it seems unlikely that he will loosen the purse strings.

Hunt stated, “Now more than ever, we need to maintain discipline with the public finances.”

He continued, “We are at a crucial juncture and need to avoid reckless spending. As this week’s fall in inflation showed, we will start to see results if we stick to our plan to halve inflation, grow the economy, and reduce debt.”

Income tax receipts increased by £2 billion, and corporation taxes saw a £1.6 billion boost, contributing to the Treasury’s coffers. However, this highlights the increasing burden on households and businesses as the government makes adjustments to tax bands and rates.

Although benefit payments rose due to inflation and energy support schemes, the higher tax revenues offset this impact. The figures also indicated a significant reduction in the government’s debt interest payments, with June’s figure totaling £12.5 billion, an improvement of £7.5 billion compared to the previous year.

Notably, inheritance tax reached a new record high of £795 million in June

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