United Kingdom budget deficit narrows in May to £6.7bn

This was £0.3bn lower than the same month a year ago and the lowest May deficit since 2007.

The public finances have been bolstered by greater government income, today's report states.

Public sector net borrowing, excluding public sector banks, fell to £6.7bn in May, according to the Office for National Statistics (ONS).

"That said, we wouldn't read too much into the borrowing figures for the first few months of the fiscal year as they are based on a significant amount of forecast data", he said, forecasting borrowing for the fiscal year will increase as a number of one-off factors that lowered borrowing in 2016-17 unwind.

But the FT warns this is not enough to give Chancellor Philip Hammond room for extensive giveaways in his Autumn Budget, not least as various surveys suggest consumer spending could be on the wane, hitting Value-Added Tax receipts.

Central government net cash requirement decreased by GBP 14.3 billion to a surplus of GBP 6.9 billion in the current financial year-to-date, the ONS reported.

United Kingdom public borrowing declined more than expected in May, providing encouraging reading for Chancellor Philip Hammond, although the budget deficit is still expected to increase over the rest of the year.

Among her election pledges, Prime Minister Theresa May vowed to deliver a balanced budget by the "middle of the next decade", knocking back Mr Hammond's previous target of putting the public finances back in the black by 2020.

The deficit narrowed last month after the Government raked in its highest tax receipts for May since records began, rising £2.6 billion to £52.7 billion.

"Of course, it is very early days in this financial year, but the Chancellor will take some cheer from these figures".

  • Zachary Reyes