Chancellor George Osborne hailed a bumper month for tax receipts as the UK’s public sector finances posted a July surplus for the first time since 2012.
The surplus, minus the effect of bank bailouts, stood at £1.3 billion last month, lower than expected but still a reversal compared to borrowing of £100 million for the same period in 2014.
The Treasury was boosted after the best July for income tax related receipts since records began in 1997, generating £18.5bn in revenues.
The figures from the Office for National Statistics (ONS) mean borrowing for the fiscal year-to-date since the start of April now stands at £24bn, £7.3bn, or 23.3 per cent, lower than it was at the same point last year.
It suggests performance on cutting the deficit is running ahead of the latest independent forecast by the Office for Budget Responsibility (OBR) that it should fall by 21.1 per cent for the full 2015/16 period.
“July’s UK public borrowing figures show that the public finances are now benefiting fully from the economic recovery’s strength,” said economist Samuel Tombs adding that prior to recession, July had regularly seen a surplus, averaging £3bn, thanks to corporation tax receipts, he added. If the trend continued, the full-year deficit could undershoot the OBR forecast by around £2bn.