A SHOCK rise in borrowing in July will cast doubt on the Treasury’s deficit reduction strategy.
• Net borrowing £600m in July - an increase of £3.4bn on same month last year
• Net debt - the sum of all borrowing - was £1.032bn, or 65.7 per cent of GDP
The new figures released today will come as a major blow for the Chancellor, George Osborne.
Public sector net borrowing, excluding financial interventions such as bank bailouts, came in at £600 million in July, compared with a surplus of £2.8 billion in the same month last year, dashing the City’s expectations of a surplus of £2.5 billion.
Alarmingly, July is normally a strong month for tax income for the Treasury, but total receipts fell 0.8 per cent, driven by a drop in corporation tax, while Government spending increased 5.1 per cent.
In a further blow to the Chancellor, net borrowing for April to June, was revised up by £1.4 billion.
That means borrowing so far this year, excluding a one-off boost after assets from the Royal Mail’s pension fund was transferred to the Treasury, is £44.9 billion, £9.3 billion higher than a year ago.
