The Office for National Statistics (ONS) released figures on Friday showing that Government borrowing in July 2021 was lower than forecast by the Office for Budget Responsibility (OBR) and was also the fourth month in a row that government borrowing was lower than forecast.
The ONS estimates borrowing was £10.1bn lower in July 2021 than July 2020 at just £10.4bn, which is still ‘eyewatering’. This is still over £5bn lower than the OBR forecast in its March report for the Budget.
Government spending is down whilst tax revenues are up £9.5bn. This is down to:
This does not mean the UK is an economic miracle. We still have much too high public sector borroing of £236bn pa, which is 98% of GDP but £60bn lower than the record in March 2021 and £30bn lower than forecast overall by the OBR for the March Budget. We have a long way to go but higher revenues over the coming years with frozen allowances for 6 years and new ways to tax us will no doubt try to balance the books.