John Healey will announce his first budget as the chancellor on 28 October. Photograph: Phil Lewis/SOPA Images/ShutterstockView image in fullscreenJohn Healey will announce his first budget as the chancellor on 28 October. Photograph: Phil Lewis/SOPA Images/ShutterstockUK reports unexpected deficit of £1.8bn as John Healey prepares for first budgetJuly data shows total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier
The UK government ran a larger than expected £1.8bn deficit in July, underlining the challenges facing the chancellor, John Healey, as he draws up his first budget.
City economists had expected a shortfall of zero for July, a month when Treasury receipts tend to be swollen by self-assessment income tax payments.
However, the Office for National Statistics said despite strong tax receipts, public sector borrowing last month was £1.8bn.
In the first four months of this financial year, the cumulative deficit was £56.7bn – lower than last year but still running £2.3bn ahead of the Office for Budget Responsibility forecast.
Total public debt was £2.98tn, or 94% of GDP – up £96bn on a year earlier – in line with Labour’s plan to borrow for investment in infrastructure projects.
Healey will announce his budget on 28 October. The public finances are expected to be gloomier than forecast at Rachel Reeves’s spring statement in March, when the Iran war had only just begun.
At that time, Reeves had a generous £23.6bn buffer, or headroom, against her fiscal rules, but analysts believe a significant proportion of that may be eaten away by higher inflation, slower growth and rising bond yields.
In response to July’s public finances, Healey said: “Fiscal discipline is the bedrock of our UK economic stability and national security, which is why we are committed to meeting our fiscal rules, with a buffer against global uncertainties.
“We are cutting the deficit faster than any other G7 economy, while giving people a bit of breathing space with cost of living pressures and focusing support to get young people into work.”
