Britain reported its biggest budget surplus for the month of July in 18 years yesterday, giving finance minister Philip Hammond some extra room for manoeuvre as he faces pressure to relax his grip on spending later this year.
The surplus, excluding state-controlled banks, stood at 2.0 billion pounds ($2.6 billion), more than double the figure in July last year. The improvement was driven by strong seasonal inflows of income tax, and reduced the deficit for the first four months of the financial year to 12.8 billion pounds.
While some of the improvement was due to one-off factors such as the timing of payments to the European Union, economists said the deficit’s steady fall would help Hammond balance calls for more spending in his budget in November. After years of cuts in real terms to many public services that have angered many voters, Prime Minister Theresa May has already announced a relaxation of the government’s tight grip on public sector pay and more money for the health service.
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