The fiscal squeeze facing new Chancellor John Healey ahead of his inaugural Budget has been laid bare as official figures showed government borrowing unexpectedly rose to £1.8 billion last month.
Borrowing figures exceed expectations
The Office for National Statistics (ONS) said government borrowing stood at £1.8 billion in July, £700 million or 68.7% higher than a year ago and confounding expectations. Most economists had forecast zero borrowing last month while the independent fiscal forecaster, the Office for Budget Responsibility (OBR), had predicted a £500 million surplus.
The borrowing hike came despite a record July for income tax receipts.
Fiscal year borrowing also above forecast
In the first four months of the financial year so far, borrowing was also more than the OBR forecast, at £56.7 billion, though this was £6 billion or 9.6% lower than a year earlier.
The data shows the fiscal headache facing Mr Healey as he prepares his first Budget on October 28.
Mr Healey said: “Fiscal discipline is the bedrock of our UK economic stability and national security, which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.
“We are cutting the deficit faster than any other G7 economy while giving people a bit of breathing space with cost-of-living pressures and focusing support to get young people into work.”
