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A July surplus of £0.12bn defied expectations


Britain's public finances were back in the black last month as a surge in self-employed workers' tax payments boosted the Treasury's coffers. The surplus of £184m is the first in any July since 2002, figures from the Office for National Statistics (ONS) show.

Economists had expected the Treasury to record a deficit of £1bn, up from the £308m additional borrowing in July 2016. But instead rising self-assessment tax receipts gave the Chancellor a boost. The July figures show that payments of self-assessed income tax increased by 11pc from the same month of last year to £8bn, the highest level since records began in 1999.

Borrowing over the financial year to date is still up compared with 2016. As well as the self-assessed income tax, the Treasury also received a boost from a 5pc climb in value-added tax revenue.

HM Treasury's current tax receipts rose by 3.6pc compared with July 2016, while spending only increased 1.6pc.

However, the deficit for the financial year to date is still up compared with last year.

Overall the deficit for the year is expected to rise from £45.1bn last year to £58.3bn this financial year, though the deficit in July may raise hopes that the government efforts combined with a growing economy and high employment could limit the rise.

Ruth Gregory, UK economist at Capital Economics, said the surplus is likely to be a “temporary blip”.

Economist Philip Shaw at Investec said:  "So far this year, the deficit is rising at an average of close to £0.5bn per month. Were this to be maintained over the remaining eight months, borrowing over 2017-18 as a whole would rise to £50.8bn."

A spokesman for the Treasury said: “We are making good progress in strengthening our public finances and living within our means.

“Our national debt, at £65,000 for every UK household, is still too high. That is why we have a clear fiscal plan to reduce our debts and build a stronger economy for every household.”

Those mounting debts are becoming increasingly expensive to service despite interest rates which are very low by historical standards. In particular the rising rate of inflation is pushing up the payments on index-linked bonds.