-Howard Archer, chief UK and European economist at IHS Global Insight
UK public sector borrowing declined in June, as income and corporation tax receipts soared to record levels. According to the Office for National Statistics, public sector net borrowing excluding banks dropped by 0.8 billion pounds to 9.4 billion pounds in June, compared with 10.2 billion pounds in June 2014 and hitting the lowest level for any June since 2008. Nevertheless, economists had expected the indicator to decrease further to 8.5 billion pounds. In the financial year so far, borrowing has fallen by 6.1 billion pounds to 25.1 billion pounds. Income tax receipts increased to 11.5 billion, while corporation tax brought in 1.7 billion pounds, both record monthly highs. Public sector net debt at the end of June 2015 stood at 1.513 trillion pounds, or 81.5% of annual UK economic output, up from 80.8% in May.
In the budget on 8 July, Chancellor George Osborne revised his annual forecast for net public sector borrowing excluding banks to 69.5 billion pounds, or 3.7% of GDP, compared with the 75.3 billion pounds forecast at the last budget in March. The government is aiming to eliminate the budget deficit by 2019 and to run a 10 billion pound surplus in 2020 and in subsequent years. Chancellor George Osborne announced 37 billion pounds of spending cuts during this parliament in the summer Budget.
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