Chancellor Philip Hammond said there was “underlying strength” in the British economy as government borrowing fell to its lowest level in June since 2007.
The Office for National Statistics (ONS) said public sector net borrowing excluding public sector banks hit £7.8 billion last month, down £2.2bn compared to last year and below economists expectations of £9.5bn.
The ONS said public sector net debt excluding banks climbed by £47.6bn to £1,620.7bn over the period, the equivalent to 84% of gross domestic product (GDP).
The lower-than-expected borrowing figures come as a last hurrah for George Osborne who has been ousted as chancellor and seen his target of a budget surplus by 2020 scrapped by new Prime Minister Theresa May.
Mr Hammond said: “These public finance figures highlight the underlying strength of the British economy. Ahead of the referendum monthly borrowing continued to fall, with the deficit in June the lowest it has been since 2007.
“As our economy now adjusts to reflect the referendum decision it is clear we will do so from a position of economic strength.”
It means that in the financial year to date, the Government has borrowed £25.6bn, a fall of more than 8% or £2.3bn compared with June 2015, the ONS said.
Mr Osborne had been looking to hit forecasts set by the Office for Budget Responsibility (OBR), which said the UK would have a budget surplus of £10.4bn in 2019/20 and £11bn the year after.
However, Mr Hammond has indicated that the Government may take advantage of the cheap cost of borrowing to push fresh investment into the UK in the hope of bolstering productivity.
The ONS said the Government’s coffers were lifted by a £2bn rise in receipts to £49bn in June, compared with the same month last year.
It was helped by an 11% increase in national insurance contributions, while corporation tax rose 4.6% and VAT receipts stepped up by 1.8%.
However, this was swallowed up after a £700 million rise in Government expenditure to £58.5bn over the period.