LONDON: As the chancellor put Whitehall departments on notice they will have to execute further sweeping spending cuts, he got a welcome boost from data showing the public finances started the year in their best shape since the financial crisis.
On the back of rising tax revenues — long the missing ingredient in the economic recovery — the deficit shrank again in June.
The government borrowed £25.1bn between April and June to cover the gap between expenditure and revenues, down 20 per cent on the same period last year, putting the books in their best position since 2008.
Victoria Clarke, UK economist at Investec, said it had been a “solid start” to the year and showed the chancellor “maintains a grip on his consolidation plans”.
With huge cuts still to come, it is vital for the chancellor to show that the existing deficit reduction plans remain on track.
But while there were some slight jitters that the pace of deficit reduction slowed slightly in June, down just £800m to £9.4bn compared to the same month last year, the Institute for Fiscal Studies said that “so far” the government looked to be on course to meet its borrowing forecasts.
