British public deficit improves in July: data

19th August 2010, Comments 0 comments

British state borrowing improved slightly in July, official data showed on Thursday, in a rare piece of good news on the state of the public finances.

The public deficit, given as the public sector net borrowing requirement (PSNBR), the government's preferred measure of the public finances, stood at 3.8 billion pounds, the Office for National Statistics said in a statement.

The reading, equivalent to 4.6 billion euros or 5.9 billion dollars, was in line with market expectations and was lower than 6.1 billion pounds in July last year.

Data for the month is traditionally boosted by higher taxation revenues but a record-length recession forced Britain to borrow in July 2009 for the first time in 13 years.

British finance minister George Osborne warned on Tuesday that his coalition government will pursue its course of deep public spending cuts as it seeks to slash the deficit and balance the books.

The Conservative-Liberal Democrat coalition inherited a record 154.7-billion-pound deficit from the previous Labour administration which it ousted at a general election in May.

The Office for Budget Responsibility -- the new government's independent fiscal watchdog -- has forecast that public sector borrowing will hit 149 billion pounds in the current financial year to March 2011.

"The public finance figures are ... a pleasant surprise," said Vicky Redwood, senior UK economist at the Capital Economics consultancy on Thursday.

"If the trend so far this fiscal year continues, borrowing in 2010/2011 as a whole should slightly undershoot the OBR's forecast of 149 billion pounds by 3.0 billion pounds or so."

The ONS added that the public sector net cash requirement (PSNCR) -- an alternative measure of the state's finances -- showed a surplus last month of 4.1 billion pounds, compared with a deficit of 0.9 billion pounds in July 2009.

© 2010 AFP

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