Blow for Chancellor as public finances stutter

The Chancellor has been dealt a blow in his efforts to balance the books after government borrowing rose unexpectedly last month.

Official data yesterday showed public sector net borrowing, excluding stateowned banks, increased by £2 billion to £6.9bn in June compared with the same month last year. Economists had pencilled in a figure of about £4.8bn.

Philip Hammond faces an increasingly tough challenge shoring up the public finances as consumer spending is squeezed by higher inflation and sluggish wage growth

John Hawksworth, chief economist at PWC, said: “June saw a modest deterioration in public finances. The general pattern is consistent with the OBR’S [Office for Budget Responsibility] March forecast that we might see some increase in the budget deficit this financial year, as the economy slows and some one-off favourable factors from last year unwind.”