Thu, 21 Aug 2025

Thu, 21 Aug 2025 Government borrowing lower than expected in July

Borrowing last month was the lowest July figure for three years, following rises in tax and National Insurance receipts.

* UK government borrowing was £1.1bn in July, lower than expected and the lowest July figure in three years.
* Borrowing over the first four months of the financial year has reached £60bn, up £6.7bn from the same period last year.
* Analysts say Chancellor Rachel Reeves will still need to raise taxes in the autumn Budget to meet her tax and spending rules.
* The Office for Budget Responsibility (OBR) predicted borrowing would reach £66.7bn this financial year, but the current total is in line with its forecast.
* The government's self-imposed fiscal rule requires it to balance the books by 2027-28, but Reeves may need to raise taxes to meet her rules.
* There has been speculation that the freeze on income tax thresholds could be extended, and Reeves is considering reforming property taxes.
* The coming Budget is likely to focus on addressing any potential shortfall against current fiscal targets, estimated at £26.2bn.
* The OBR's latest growth forecast will influence projections for tax income over the years ahead.
* The cost of government u-turns on benefit cuts and interest rates on government borrowing will also be factors in the Budget.
* Private sector output growth has hit its fastest pace for a year, according to the latest UK composite purchasing managers' index (PMI).
* Food and drink prices have risen by 4.9% over the last year, with prices rising slightly quicker than expected and at their fastest pace since January 2024.
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