26 Jul 2023
Think tank the Resolution Foundation has warned that government net debt hitting 100% of GDP creates a 'tough economic inheritance' for the next government.
Data published recently by the Office for National Statistics (ONS) revealed that higher tax receipts drove better than expected borrowing, meaning that borrowing was lower in June than experts had anticipated.
Borrowing in June reached £18.5 billion – £27 billion below the forecast produced in March by the Office for Budget Responsibility (OBR). The improved borrowing figures were partly fueled by higher tax receipts and a reduction in spending on measures to support UK businesses and households during the cost-of-living crisis.
The ONS data showed that government borrowing is now £7.5 billion lower than forecast for the year to date.
Commenting on the issue, Cara Pacitti, Senior Economist at the Resolution Foundation, said: 'Better than expected borrowing in June, driven by higher tax receipts, caps a largely positive set of recent economic data, with inflation falling faster than expected last month.
'But the bigger picture is one of the public finances being under severe strain, with net debt hitting 100% of GDP, and the rising cost of servicing debt squeezing out other priorities for spending.'