UK public borrowing falls unexpectedly as tax receipts grow

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UK public sector borrowing unexpectedly fell in June, helped by lower interest payments and stronger tax receipts.

Public sector net borrowing hit £18.5bn last month, £0.4bn lower than in the same month in 2022, but the third-highest June borrowing since monthly records began in 1993, according to data published by the Office for National Statistics on Friday.

The figure was also lower than the £22bn forecast by economists polled by Reuters. The ONS said higher tax receipts and a substantial fall in debt interest payable compared with June 2022 were largely offset by increased benefit payments and other costs.

“Now more than ever we need to maintain discipline with the public finances,” said chancellor Jeremy Hunt said. “We are at a crucial juncture and need to avoid reckless spending.”

In June, the interest payable on central government debt was £12.5bn, £7.5bn less than the record £20bn in June last year, reflecting movements in the retail price index to which a large proportion of gilts are linked.

Borrowing in the three months to June was £54.4bn, which was £12.2bn more than in the same period last year but £7.5bn less than the £61.9bn forecast by the Office for Budget Responsibility, the UK fiscal watchdog. 

Ruth Gregory, economist at Capital Economics, said the figures would bring “some cheer for the government on a day when it has lost two by-elections”.