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New statistics reveal that UK public sector borrowing in July exceeded expectations but remained manageable due to higher tax revenues. This offers hope for potential tax cuts ahead of the upcoming general election.
The Office for National Statistics reported a public sector net borrowing of £4.3bn last month, representing a £3.4bn increase from July 2022. However, this figure falls short of the £6bn forecasted by the Office for Budget Responsibility and economists polled by Reuters, indicating a positive outlook.
The ONS stated that government receipts last month amounted to £85.2bn, a £3.4bn surge from the previous year and surpassing OBR expectations. This growth was driven by higher income taxes, corporation tax, and value-added tax, fueled by a resilient labor market.
In the first four months of the fiscal year, borrowing reached £56.6bn, surpassing last year’s figure by £13.7bn but falling below the OBR’s projected £68bn. This solidifies the trend of better-than-expected fiscal performance.
“The recent positive developments in the fiscal situation continue,” commented Ruth Gregory, economist at Capital Economics.
The upcoming months will be crucial in determining Chancellor Jeremy Hunt’s ability to implement tax cuts before the general election. Hunt emphasized the importance of responsible fiscal management amidst slowing inflation.
This is an ongoing story.
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