London, England, United Kingdom (4E) – UK’s budget deficit fell in August as tax revenues climbed and the government lowered spending, a further sign that the economic recovery is gaining traction.
Public sector net borrowing, the government’s preferred gauge of the budget deficit, stood at 13.2bn pounds ($21.19bn) in August, compared with 14.4bn pounds borrowed in the year-ago period, according to the Office for National Statistics (ONS).
The country’s economic rebound has gained momentum recently, putting Chancellor of the Exchequer George Osborne in a better position to meet the fiscal targets he set for this year. The revival has increased public support for his Conservative Party and undermined the opposition Labour Party’s argument that austerity is holding back growth.
Tax income increased across the board last month, except for income and capital-gains tax, which fell 5.8 percent from a year ago because of changes in the timing of payments. Revenue from corporate tax increased 3.7 percent. Expenditures of government departments fell 4.8 percent, attributed to changes in the profile of payments to local authorities. Welfare costs remained flat from the previous year.
Friday’s ONS data also showed that the underlying deficit narrowed to 46.8bn pounds from 50.5bn pounds in the first five months of the fiscal year, as payments of stamp duty boosted revenue. Both receipts and spending advanced by nearly 3 percent.