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UK debt falls as tax hikes and even inflation help boost government coffers Business News

Tax increases and additional VAT from rising prices have helped to bolster the Treasury’s coffers and reduce Britain’s debt.

The Office for National Statistics (ONS) said the budget deficit was £18.5bn in June, down from £20bn a month earlier.

This was less than the £22bn experts had predicted.

June’s deficit took borrowing to £54.4bn in the first three months of the financial year, £12.2bn higher than the same period last year but £7.5bn less than budget forecasters expected.

The ONS has also cut its April to May borrowing estimate by £7bn following a rise announced by the government in November last year with stronger than forecast tax revenues.

high Inflation Driving costs have also played a role, with VAT collections up 9% this financial year compared to a year ago, despite no increase in the basic rate.

However, borrowing rates are higher after shocks. Corona Virus Fueled by the pandemic and last year’s energy price hikes Ukraine war

Last month’s figure was still the third-highest government borrowing in any June since 1993.

The Prime Minister Rishi Sink And the chancellor Jeremy Hunt Having so far resisted calls for tax cuts from its own backbenches ahead of a general election expected next year, the party trails Labor in opinion polls.

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Responding to the borrowing figures, Mr Hunt said: “Now more than ever we need to maintain discipline with the public finances.

“We are at a turning point and we need to avoid complacency.

“As this week’s drop in inflation showed, if we stick to our plan to halve inflation, grow the economy and reduce debt, we will start to see results.”

Also, supporting the government is a better than expected performance. The economy as early as 2023 which has so far avoided recession while effectively flat-lining.

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gave COVID 19 The crisis led to a rise in government debt and public debt exceeded the country’s economic output in June.

However, this is not the first time in recent years that the UK has passed the 100% GDP milestone only for the data to be revised later.

The government paid £12.5bn in interest on its debt last month, the third-highest of any month on record, despite being significantly down on payments of £20bn in June last year.

Samuel Toombs, economist at Pantheon Macroeconomics, said the recent improved public debt news would not be celebrated much by the Treasury as the outlook for debt interest payments worsened.

He said: “We continue to think that the chancellor will not have room to make meaningful tax cuts before the next general.

Source by [Sky News]



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