UK public finances record surplus in July

That represents a drop of 23.3%, or £7.3bn, from the same period previous year .

The surplus was the first for the month since 2012, in a sign that the wider economic recovery is finally feeding through into the public finances.

Against the backdrop of a pick-up in employment and earnings this year, there was a boost to the public coffers from income tax receipts in July.

The country’s public finances are back in the black for the first time in three years, driven by the strongest tax receipts since records began in 1997. But with debt over 80 per cent of GDP, the job is not done’. Hitting the target would reduce the deficit to 3.7 per cent of GDP from 4.9 per cent in 2014/15.

It suggests performance on cutting the deficit is running ahead of the latest independent forecast by the Office for Budget Responsibility (OBR) that it should fall by 21.1 per cent for the full 2015/16 period.

Many corporations pay their first company tax instalment on 2015 income in July, whereas self-assessment liabilities are additionally due, often making July the second highest month for receipts through the yr. The ONS stated a discount in central and native authorities internet borrowing of £1.5bn final month additionally helped to push Britain into surplus.

Investec’s Victoria Clarke said: ‘This evidence of a steady narrowing in the deficit will clearly do Osborne no harm in continuing to argue that his fiscal plans are working.

Public sector net debt, excluding state-controlled banks, totalled 1.505 trillion pounds in June equivalent to 80.8 percent of GDP.

Capital Economics’ senior UK economist Samuel Tombs highlighted that before the financial crisis, July’s surplus typically stood at around £3bn.

“If this trend persists over the remaining eight months of the fiscal year, this year’s deficit would be £67bn, about £2bn lower than the OBR forecast in the Summer Budget”.

David Kern, chief economist for the British Chambers of Commerce (BCC), welcomed the news but added that the UK still faced “major challenges” to stabilise its finances. Revenue from VAT rose three.3pc to £10.5bn and company tax elevated grew 5.2pc to £6.9bn.