Aug 21 (Reuters) – Britain’s government recorded an unexpected budget deficit of £1.8 billion ($2.5 billion) in July, as higher government spending caused by inflation counteracted record self-assessed income tax receipts for the month.
A Reuters poll of economists had pointed to a balanced budget, while the Office for Budget Responsibility’s projections had pencilled in a £500 million surplus — which would have been the first for any July since before the COVID-19 pandemic.
But the Office for National Statistics said central government expenditure on social benefits was up £2 billion in July compared with a year ago, while spending on goods and services — which includes staff costs — was up £1.2 billion.
Borrowing for the first four months of the financial year stood at £56.7 billion, against the OBR’s projection of £54.4 billion for this point.
Overall the data underlined the financial constraints facing new Prime Minister Andy Burnham and his finance minister John Healey, who is preparing a budget for October — despite some surprisingly upbeat economic growth data recently.
The current budget deficit, which must be balanced in 2029/30 according to the current fiscal rules, stood at £34.7 billion over the April-July period, against the OBR’s projection of £36.7 billion.
“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,” Healey said in a statement.
($1 = 0.7324 pounds)
(Reporting by Andy Bruce; editing by William James)
Comments