The UK saw a surplus for the first time in 15 years.
Tax returns from the self employed, which were up 11%, pushed the Treasury into the black in July. Income from valued added tax (VAT) also rose.
Is it an anomaly?
One analyst described it as a “blip”: if the deadline for returns had fallen in August, there would have been no surplus.
And borrowing is up
Borrowing is up almost 10% from last year, with associated debt costs up by just over 20%.
The D word
The deficit is now down to around 2% of GDP, from 10% in 2010.
This suggests the government is going to meet its target of eliminating the deficit by 2025. However, it’s expected to regrow by 1% this year.
No easing of fiscal policy
The national debt stands at £65k per household and is set to rise. Meanwhile, economic growth is expected to be small this year.
Also, inflation is relatively high. This is making it more expensive for the government to repay index linked bonds. Then there’s the exit costs of Brexit to plan for.
Even though there has been mounting pressure to end austerity and raise public sector wages by the Labour Party, the chancellor shows no indication that fiscal policy will be loosened come the November budget.