UK Posts £1.8bn July Deficit as Spending Outruns Tax Windfall Ahead of Oct. 28 Budget
Updated
Updated · The Guardian · Aug 21
UK Posts £1.8bn July Deficit as Spending Outruns Tax Windfall Ahead of Oct. 28 Budget
3 articles · Updated · The Guardian · Aug 21
Summary
A £1.8bn July deficit left the UK short of economists’ zero-balance forecast, adding pressure on Chancellor John Healey as he prepares his first budget for Oct. 28.
£17.1bn in self-assessment tax receipts—up £1.7bn from a year earlier—was not enough because spending growth outpaced revenue, with welfare and pension payments among the main drags.
The first four months of the fiscal year produced a £56.7bn cumulative deficit, still £2.3bn above the Office for Budget Responsibility’s forecast, while public debt reached £2.98tn, or 94% of GDP.
Ten-year gilt yields above 5% are raising future debt-interest costs and squeezing the fiscal buffer Rachel Reeves put at £23.6bn in March, even as Healey must find another £1.2bn a year for defence.
A brighter August PMI survey pointed to roughly 0.3% third-quarter growth, but stronger services activity may offer only limited relief against higher inflation, slower growth and rising borrowing costs.