Tax cut hopes raised as UK borrows less than expected in July

investmentweek.co.uk:

In the first quarter of the financial year, the UK’s borrowing stood at £56.6bn.

Net borrowing, excluding state-owned banks, stood at £4.3bn last month, less than the expected figure of £5bn from a Reuters poll of economists.

That was £3.4bn more than in July 2022 and the fifth-highest July borrowing since monthly records began in 1993.

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In the first quarter of the financial year, the UK's borrowing stood at £56.6bn.

That was £13.7bn more than in the same period last year, but £11.3bn less than the £68bn forecast by the Office for Budget Responsibility, whose projections underpin the government's fiscal plans.

Hunt and Prime Minister Rishi Sunak have so far resisted pressure from within their own party to cut taxes in an attempt to improve their opinion poll ratings and chances at the next election.

Following the release of the public borrowing data by the Office for National Statistics (ONS), Hunt said in a statement: «As inflation slows, it is vital that we do not alter our course and continue to act responsibly with the public finances. 

»Only by sticking to our plan will we halve inflation, grow the economy and reduce debt," he added.

Hunt has kept a tight grip on the public finances since he took over at the Treasury late last year after turmoil in financial markets caused by former Prime Minister Liz Truss's unfunded tax cut plans.

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Public sector net debt was £2.6trn at the end of July 2023 and provisionally estimated to be about 98.5% of the UK's annual GDP, the ONS said.

This is 1.9 percentage points higher than in July 2022, and continuing at levels last seen in the early 1960s.

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