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UK Budget Balance Posts Small Surplus In July

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The UK budget balance showed a small surplus in July, figures from the Office for National Statistics showed Wednesday.

Public sector net borrowing excluding public sector banks was in GBP 1.3 billion surplus in July. This was smaller by GBP 2.2 billion from July 2018 and also remained below economists' forecast of GBP 2.7 billion.

While the central government borrowed GBP 1.3 billion, local government and the Bank of England registered surpluses of GBP 2.2 billion and GBP 0.4 billion, respectively.

In July, accrued receipts are particularly high owing to receipts from self-assessed Income Tax.

The ONS said receipts from self-assessed Income Tax increased GBP 0.3 billion to GBP 9.4 billion. This was the highest level of July self-assessed Income Tax receipts on record.

However, during the current financial year-to-date period, the PSNB widened by GBP 6 billion from last year to GBP 16.0 billion.

At the end of July, public sector net debt excluding public sector banks totaled GBP 1.80 trillion or 82.4 percent of gross domestic product.

Thomas Pugh, an economist at Capital Economics, said the small surplus in July's public finances wasn't enough to make up for the jump in borrowing since the start of the financial year

It seems likely that government borrowing will continue to overshoot the Office for Budget Responsibility's forecast over the next few months as the government ramps up spending on preparations for a no deal Brexit, the economist added.

In March, the OBR had forecast a borrowing of GBP 29.3 billion for the full year.

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