The UK government borrowed slightly less than expected in June, official figures showed, as new prime minister Andy Burnham began setting out measures to cut living costs for households. Borrowing, the gap between spending and tax income, came in at £16bn last month, which was £7.9bn lower than in June last year, according to the Office for National Statistics (ONS).
Separate figures also showed the unemployment rate was unchanged between March and May, with the ONS saying the labour market was "relatively steady". However, while the borrowing figures were better than forecast, the ONS said total debt remained near £3 trillion, close to the annual value of the entire UK economy.
How did June borrowing compare with forecasts?
June borrowing was slightly below the £16.3bn predicted by the government's official forecaster, the Office for Budget Responsibility (OBR). The improvement provided a modest boost to the new administration as it begins to set out its economic priorities.
Ruth Gregory, deputy chief UK economist at Capital Economics, said June's slightly lower than expected borrowing figure was
"a rare piece of good news"for the new prime minister and his new chancellor John Healey.
However, she added:
"Overall, there's no escaping the fact that the public finances are fragile and that there is limited scope for extra borrowing."
What do the wider public finances look like?
Borrowing in the current financial year has reached £57.6bn so far. That is £3.7bn lower than in the same period last year, but it is also £2.7bn above the OBR's forecast.
Burnham and Healey have both pledged to stick to former chancellor Rachel Reeves' fiscal rules on spending and borrowing. Although the new prime minister said on Monday he would use
"any flexibility within them"to help with policy changes.
What does the labour market data show?
The latest survey of the labour market showed the unemployment rate remained unchanged at 4.9%. Growth in regular earnings, which excludes bonuses, also remained unchanged, rising at an annual pace of 3.4% in the March to May period.
However, the ONS noted that regular wage growth in the private sector fell below 3% for the first time since 2020. Gregory said the latest data suggested the labour market was
"still weak", and as a result the Bank of England was likely to keep interest rates on hold at 3.75% when it meets next week.
Key Facts
- UK government borrowing in June was £16bn, down £7.9bn from June last year.
- The figure was slightly below the £16.3bn forecast by the OBR.
- Unemployment stayed at 4.9% between March and May.
- Regular earnings rose by 3.4% annually in the March to May period.
- Total debt remained near £3 trillion, close to the size of the UK economy.
