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State borrowing halves as UK economy rebounds from Covid lockdown

State borrowing halves as UK economy rebounds with £9.5billion higher tax haul compared to July last year while state spending falls by £2.9billion

  • Lifting of Covid rules saw a £9.5billion higher tax haul than last July, says ONS
  • But national debt stands at more than £2.2trillion – or £88,000 per household
  • Britain has borrowed £78billion in the first four months of the fiscal year in 2021

State borrowing halved last month as the economic rebound boosted tax receipts and cut furlough payments.

The Government borrowed £10.4billion in July – down from £20.5billion in the same month last year, the Office for National Statistics said.

Economic activity was driven up by the lifting of Covid rules, which led to a £9.5billion higher tax haul than last July. 

At the same time, state spending fell by £2.9billion, largely because furlough schemes are ending, said the ONS.

However, it was still the second highest borrowing figure for July on record behind last year. 

Chancellor Rishi Sunak (pictured) said: ‘Our recovery from the pandemic is well under way, boosted by the huge amount of support Government has provided’

And in a sign of the damage caused by the coronavirus crisis, the national debt stands at more than £2.2trillion – or £88,000 per household. 

The debt burden is now the equivalent of 98.8 per cent of economic output in the UK – the highest since March 1962 when it was 99.5 per cent.

Chancellor Rishi Sunak said: ‘Our recovery from the pandemic is well under way, boosted by the huge amount of support Government has provided. 

‘But the last 18 months have had a huge impact on our economy and public finances, and many risks remain.’

Britain has now borrowed £78billion in the first four months of the fiscal year.

This is down from £140billion in the same period last year but it remains uncomfortably high for the Chancellor ahead of his three-year spending review this autumn.

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