UK Public Finances Log Surplus In July

The UK public sector net borrowing in July turned to surplus for the first time in 15 years on higher receipts of income tax, the Office for National Statistics said Tuesday.

Public sector net borrowing excluding public sector banks was in GBP 0.2 billion surplus, which was the first July surplus since 2002. In July 2016, borrowing was GBP 0.3 billion.

Economists had forecast borrowing to increase to GBP 1 billion in July.

July's public finances brought some cheer for the Chancellor after the run of fairly poor outturns seen so far this fiscal year, Ruth Gregory, an economist at Capital Economics, said.

But this will probably prove to be just a temporary blip, rather than the start of a more sustained improvement, Gregory noted.

In January and July, accrued receipts are particularly high due to receipts from self-assessed Income Tax.

The receipts from self-assessed Income Tax increased by GBP 0.8 billion annually to GBP 8.0 billion, the highest level of July self-assessed Income Tax receipts on record.

As a result, PSNB increased only by GBP 1.9 billion from previous year to GBP 22.8 billion in the current financial year-to-date.

The Office for Budget Responsibility forecast that PSNB excluding interventions will be GBP 58.3 billion during the financial year ending March 2018.

At the end of July, public sector net debt was GBP 1,758.3 billion, equivalent to 87.5 percent of gross domestic product.

A Treasury spokesperson said, "We are making good progress in strengthening our public finances and living within our means."

"Our national debt, at GBP 65,000 for every UK household, is still too high. That is why we have a clear fiscal plan to reduce our debts and build a stronger economy for every household."