Biggest budget surplus for the UK in 18 years

BRITAIN has recorded its biggest budget surplus for 18 years as tax receipts flood in ahead of Brexit, new figures show.

In a further sign the economy continues to prosper, the Office for National Statistics said the Government received £2billion more in taxes than it spent last month.

It was the biggest July surplus since 2000 and came as the public purse was boosted by a record £9billion from selfassessment tax receipts.

Borrowing so far this year is now well below target, with analysts predicting that the annual deficit could come in £13billion lower than expected.

The figures make a mockery of former Chancellor George Osborne’s warnings that a vote to leave the EU would blow a huge hole in the public finances.

Instead, the strong performance gives successor Philip Hammond wriggle room ahead of the autumn Budget. He is also likely to face calls from MPs to spend more cash on the armed forces, schools, the police and prisons.

However yesterday Mr Hammond declared: ‘We can’t be complacent, we must keep debt falling.’

July is usually a bumper month because it is when self-assessment tax receipts land, but analysts said yesterday’s figures were particularly strong. The cash flow helped drive down Government borrowing from April to July to £12.8billion – £8.5billion less than the same period last year.

While some of the improvement was put down to one-off factors such as the timing of payments, economists said the deficit’s fall would also make it easier for Mr Hammond to meet his pledge to plough £20billion into the NHS.

If the lower levels of borrowing persisted this year, some said it would put the Government on course to borrow about £24bil- lion instead of its £37.1billion annual target.

But economists said there was little scope for tax cuts if Mr Hammond hoped to rein in Britain’s debt mountain that stands at almost £1.8trillion.

John Hawksworth, of PwC, said: ‘This news should give the chancellor a bit more wiggle room when it comes to his Budget in November. But he will still have some tough choices to make, probably including some tax rises, if he is to fund planned increases in NHS spending and ease austerity for schools and other public services.’

The upbeat news came as the Confederation of British Industry said manufacturing output remained above-average in the three months to August.

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