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UK borrowing drops in June but debt remains near £3tn
June borrowing was £16.0bn, but total UK debt is still close to £3tn and 10-year gilt yields moved above 5% after the new government comments.
The UK government borrowed slightly less than expected in June, with borrowing coming in at £16.0bn, £7.9bn lower than a year earlier, according to official figures reported by BBC Business. The monthly borrowing figure was also slightly below the £16.3bn predicted by the Office for Budget Responsibility.
Even with the improvement, challenges remain for public finances, the outlet said, pointing to ONS data showing total debt is near £3tn, close to the annual value of the entire UK economy. Separate data indicated the unemployment rate was unchanged, with the labour market described as relatively steady by the ONS.
BBC Business also reported that for the current financial year, borrowing totals £57.6bn, down £3.7bn from the same period last year but £2.7bn above the OBR forecast. Economists cited by the BBC said the gap versus projections highlights the difficulty facing the new prime minister Andy Burnham and chancellor John Healey ahead of the autumn Budget.
After Burnham said he would use any flexibility within existing fiscal rules to support policy changes, the BBC reported that the yield on 10-year government bonds rose above 5%, reaching 5.03% late Monday before slipping to 5.01% when trading began on Tuesday. Healey said fiscal credibility is the bedrock for economic stability and national security, while the new leadership also announced an initial plan to cut VAT on household electricity.