Government borrowing in July totalled £1.1 billion, substantially below economist and OBR forecasts. Stronger self-assessment receipts and lower debt interest costs drove the undershoot. Self-assessment payments rose to £15.5 billion, up £2.7 billion year-on-year, while debt interest payments were £7 billion, £1.5 billion below OBR estimates. Total tax receipts increased by £6.1 billion to £77.6 billion, led by income tax and national insurance. Public spending rose to £92.1 billion. Year-to-date borrowing sits at £60 billion, roughly matching OBR forecasts, but the underlying budget deficit is £5.7 billion above projections, with economists divided on the remaining gap ahead of the autumn OBR update.
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.
So far this fiscal year, borrowing has reached £60 billion, broadly in line with the OBR's forecast of £59.9 billion. However, the underlying budget deficit - a key fiscal rule measure - is running £5.7 billion above projections, intensifying the challenge for Reeves as she looks to balance revenues with spending. Economists remain divided on the size of the gap. Capital Economics suggests the chancellor may need to plug a shortfall of up to £27 billion
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