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. At £17.1bn, the self-assessment tax paid in July was £1.7bn higher than the same month last year.
However, the Office for National Statistics said the government still ran a £1.8bn deficit, as “spending growth outpaced receipts”. 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. 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.
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