Lower borrowing brings boost for Osborne

Seen here during Prime Minister's Questions this week, Mr Osborne will be on his feet again on July 8 to present the emergency  Budget
Seen here during Prime Minister's Questions this week, Mr Osborne will be on his feet again on July 8 to present the emergency Budget

Chancellor George Osborne has received a boost ahead of his emergency summer Budget as official figures showed a further improvement in the UK’s public finances.

Borrowing - excluding the effect of bank bailouts - was £10.1 billion in May, £2.2bn lower than in the same month last year, according to the Office for National Statistics (ONS).

Public finances were bolstered by VAT receipts, cuts in Government investment and banking fine contributions from Barclays and Germany’s Deutsche Bank.

The figures are the last set of public finance data to be published before the Chancellor’s first all-Tory Budget on July 8.

Earlier this month, Mr Osborne set out plans for tough new fiscal rules that will force governments to run a surplus when the economy is in good health.

Finance watchdog the Office for Budget Responsibility is currently forecasting a fall in UK annual borrowing to £75.3bn for 2015/16. For 2014/15 it was £89.2bn so the improvement pencilled in for the year is 15.6 per cent.

Public sector net debt excluding public sector banks now stands at £1.5 trillion the ONS said, which is 80.8 per cent of gross domestic product.

A Treasury spokesman said: “Today’s figures show that our deficit reduction plan is working, with borrowing in line with Budget expectations.”

He added: “We’ve learnt that there is no short cut to fixing the public finances to provide economic security for working people.

“So that is why we will bring forward a strong new fiscal framework at the Budget to entrench a permanent commitment to run a budget surplus in normal times, and the budget responsibility it represents.”

The pubic finances also saw income tax related payments lift by £500 million last month to £10.8 billion, as unemployment continues to fall and wage rises hit their highest rate for four years earlier this month.