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Hammond boosted as July budget surplus beats forecasts

By Sean Farrell

Date: Tuesday 21 Aug 2018

Hammond boosted as July budget surplus beats forecasts

(Sharecast News) - The government has posted its biggest July budget surplus for 18 years, giving Philip Hammond room for spending within his self-imposed fiscal constraints as the chancellor prepares his annual budget.


Public sector net borrowing, excluding public sector banks, showed a surplus of £2.0bn for July - £1bn more than a year earlier, official figures showed. The result was the biggest surplus for July since 2000 and beat than the £1.1bn average surplus forecast in a Reuters poll of economists.

The surplus took net borrowing for the first four months of the current financial year to £12.8bn - a reduction of £8.5bn from a year earlier and the lowest net borrowing at this point since 2002.

The government's finances were boosted by record tax receipts from self-assessment of £9.0bn - £1bn more than a year earlier and the highest figure for self-assessed taxes since records began in 1999.

The Office for Budget Responsibility has predicted £37.1bn of public sector net borrowing for the current financial year. Capital Economics said if the rate of reduction holds up then borrowing would undershoot the OBR's forecast by about £13bn - though the consultancy said this was unlikely.

Ruth Gregory, Capital Economics' senior UK economist, said: "As things stand, the chancellor should have some extra money to play with in the autumn budget - on top of the scope already contained within his fiscal mandate. And he should be able to deliver the extra funds for the NHS without compromising his fiscal target or having to find savings elsewhere."

Hammond will report his annual budget in November. He is under pressure from some Conservative cabinet ministers to loosen spending constraints in pursuit of growth as the economy slows and Britons grow weary of the austerity measures Conservative chancellors have dealt out for more than eight years. In June the prime minister pledge an extra £20bn a year for the National Health Service by 2023 but Hammond is resisting calls for spending increases at other departments.



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