UK public sector borrowing fell to £1.1bn in July, the lowest July borrowing for three years, as stronger tax revenues slowed the rise in public borrowing. Receipts were boosted by better-than-expected economic performance in the first half of the year. Year-to-date borrowing remains £6.7bn higher than the same period last year. National debt is close to 100% of GDP, which heightens investor and lender focus on fiscal discipline. Rising welfare spending and elevated gilt yields increased the estimated June debt servicing cost to almost £20bn, reducing fiscal headroom ahead of the Autumn Budget and raising the likelihood of tighter spending and tax rises.
UK public sector borrowing dropped to £1.1bn in July, the lowest July borrowing for three years, as stronger tax revenues slowed the increase in public borrowing. The uplift in receipts was largely driven by a better-than-expected economic performance in the first half of the year. Despite this improvement, borrowing for the financial year to date remains £6.7bn higher than the same period last year.
The national debt is hovering close to 100% of GDP, keeping fiscal discipline in sharp focus for investors and lenders. The current trajectory of spending on the ever-enlarging welfare state is unsustainable, and elevated gilt yields continue to push up the cost of servicing the debt (estimated at almost £20bn in June), eating into the Chancellor's fiscal headroom ahead of a tricky Autumn Budget.
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