The Treasury ran up a rare July deficit on the public finances last month, raising doubts about the coalition's progress in tackling the black hole in Britain's public finances.
July is traditionally a strong month for receipts, since quarterly corporation tax payments fall due. But the Office for National Statistics said public sector net borrowing in July was £100m, compared with a £0.8bn surplus in the same month last year.
Once the boost from banking the proceeds of the government's quantitative easing programme were excluded, the deficit was £500m.
Taking the first four months of the financial year together, the underlying picture was of a £36.8bn shortfall, up from £35.2bn over the same period in 2012-13. That was an increase of 4.7% – a larger rise than the independent Office for Budget Responsibility is expecting for the fiscal year as a whole.
However, the Treasury insisted the figures should not be taken as evidence that its deficit-busting strategy is off track, stressing that one-off factors had affected the figures.
Transfers to Whitehall departments including health and international development took place in July, it said, and a change to the way local authorities are funded had also skewed the results.
With growing evidence that the economy is starting to pick up, after flirting with recession at the turn of the year, the Treasury is hoping that stronger growth will boost tax revenues and ease the pain of tackling the deficit.
Tax revenues in July were £54.4bn, the ONS said, £2.2bn, or 4.2%, higher than last year. A spokeswoman said: "Strong tax receipts in July confirm that the economy is moving from rescue to recovery.
There is still a long way to go as the UK recovers from the biggest economic crisis in living memory, and the government is sticking to the economic plan that has already cut the deficit by a third and enabled the private sector to create over 1.3 million new jobs."
Peter Dixon, UK economist at Commerzbank, said: "All in all, it's only a very small deficit, we're not going to get too carried away about it. At this stage, we are probably on track to meet the government's forecasts for the year as a whole, but the UK still has a lot of work to do to get its finances back in order."
The ONS also published its latest estimate of last year's public finance totals, which showed public sector net borrowing for 2012-13 as a whole, excluding temporary factors, at £116.5bn, £2bn lower than a year earlier, and stronger than the £120.9bn deficit expected by the OBR in its latest forecast.
That means George Osborne can argue that he continued to make at least some progress in deficit reduction last year, despite the fragile state of the economy.
However, with the Exchequer still running up deficits, Britain's national debt has continued to rise, hitting £1.19tn at the end of July, the ONS said, equivalent to 74.5% of GDP.
When he delivered his first, "emergency" budget in June 2010, the chancellor said he expected public sector debt to peak at 70.3% of GDP this year.
heguardian.com
July is traditionally a strong month for receipts, since quarterly corporation tax payments fall due. But the Office for National Statistics said public sector net borrowing in July was £100m, compared with a £0.8bn surplus in the same month last year.
Once the boost from banking the proceeds of the government's quantitative easing programme were excluded, the deficit was £500m.
Taking the first four months of the financial year together, the underlying picture was of a £36.8bn shortfall, up from £35.2bn over the same period in 2012-13. That was an increase of 4.7% – a larger rise than the independent Office for Budget Responsibility is expecting for the fiscal year as a whole.
However, the Treasury insisted the figures should not be taken as evidence that its deficit-busting strategy is off track, stressing that one-off factors had affected the figures.
Transfers to Whitehall departments including health and international development took place in July, it said, and a change to the way local authorities are funded had also skewed the results.
With growing evidence that the economy is starting to pick up, after flirting with recession at the turn of the year, the Treasury is hoping that stronger growth will boost tax revenues and ease the pain of tackling the deficit.
Tax revenues in July were £54.4bn, the ONS said, £2.2bn, or 4.2%, higher than last year. A spokeswoman said: "Strong tax receipts in July confirm that the economy is moving from rescue to recovery.
There is still a long way to go as the UK recovers from the biggest economic crisis in living memory, and the government is sticking to the economic plan that has already cut the deficit by a third and enabled the private sector to create over 1.3 million new jobs."
Peter Dixon, UK economist at Commerzbank, said: "All in all, it's only a very small deficit, we're not going to get too carried away about it. At this stage, we are probably on track to meet the government's forecasts for the year as a whole, but the UK still has a lot of work to do to get its finances back in order."
The ONS also published its latest estimate of last year's public finance totals, which showed public sector net borrowing for 2012-13 as a whole, excluding temporary factors, at £116.5bn, £2bn lower than a year earlier, and stronger than the £120.9bn deficit expected by the OBR in its latest forecast.
That means George Osborne can argue that he continued to make at least some progress in deficit reduction last year, despite the fragile state of the economy.
However, with the Exchequer still running up deficits, Britain's national debt has continued to rise, hitting £1.19tn at the end of July, the ONS said, equivalent to 74.5% of GDP.
When he delivered his first, "emergency" budget in June 2010, the chancellor said he expected public sector debt to peak at 70.3% of GDP this year.
heguardian.com
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