UK government borrowing dropped to record low in June

UK government borrowing dropped in June to the lowest level for the month in seven years, suggesting that the recent economic recovery is helping public finances.

According to the Office for National Statistics, UK public borrowing dropped to £9.4 billion in June, down from £10.2 billion in the same month last year. However, government borrowing did not drop as much as economists had forecast down to £8.5 billion.

During the first three months of the 2015/16 tax year, net public sector borrowing was 20 percent lower than in same period last year and at the lowest level for the same period since the Great Recession.

Income tax receipts in June increased by £300m to £11.5bn, the highest level since record keeping began in 1997, according to the ONS.

Corporation tax increased by nearly 14 percent to £1.7 billion – another record high.

A Treasury spokesman said:

“Today’s figures show that our deficit reduction plan is working, with cumulative borrowing over £6 billion lower than at this point last year.

“We have more than halved the deficit, but with debt over 80% of GDP the job is not done.

“That is why we will continue to work through our long-term plan to achieve a budget surplus in normal times and secure a better economic future for working people.”

Howard Archer of IHS Global Insight said: “While June’s improvement was slightly less than had been expected, Chancellor George Osborne is still likely be pleased to see the shortfall on the public finances narrow for a sixth month running.”