UK Government Faces £1.8bn Deficit in July
Unexpected shortfall contrasts sharply with economists' zero borrowing forecasts and OBR's predicted surplus.
Sarah Connor
The UK government recorded an unexpected £1.8 billion deficit in July.
Spending on social benefits alone climbed by £2 billion compared to July of last year.
Overall borrowing for the financial year now stands at £56.7 billion, exceeding the Office for Budget Responsibility’s (OBR) forecast of £54.4 billion.
Grant Fitzner confirmed this month's borrowing surpassed last July's figures; spending growth outpaced higher receipts.
This includes receipts from self-assessed taxes, which typically feed in more strongly during July.
The Office for National Statistics (ONS) added that income tax receipts may also filter through to the August data, due to some delayed July self-assessment payments.
Analysts claim the public finances are expected to be gloomier than forecast at Rachel Reeves’s spring statement in March.
The 10-year gilt yield rose to 5.155 per cent at one point this week.
Fiscal discipline is the bedrock of our UK economic stability and national security, which why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.
John Healey will announce his budget on 28 October; the Treasury reportedly focuses on controlling public finances.
He also claimed the government is cutting the deficit faster than any other G7 economy while giving people breathing space with cost-of-living pressures.