The UK government borrowed £16bn in June, slightly less than the £16.3bn predicted by the official forecaster, the Office for Budget Responsibility, according to figures released as new Prime Minister Andy Burnham began outlining measures to cut living costs. The borrowing figure was £7.9bn lower than a year earlier, but the Office for National Statistics said total debt remained high by historical standards and close to the annual value of the economy. Ruth Gregory, deputy chief UK economist at Capital Economics, called it "a rare piece of good news" for Burnham and his new chancellor, John Healey, but added: "Overall, there's no escaping the fact that the public finances are fragile and that there is limited scope for extra borrowing."
So far in the current financial year, borrowing has reached £57.6bn, down £3.7bn from the same period last year but £2.7bn above the OBR's forecast. The unemployment rate was unchanged, with the ONS describing the labour market as "relatively steady". James Smith, chief UK economist at ING, told the BBC's Today programme that borrowing still running ahead of projections was "a reminder of the challenges that the new chancellor and the new prime minister face", adding that they would face a "difficult picture" at the autumn Budget with "lots of tough choices to be made".
“UK borrowing fell to £16bn in June, beating forecasts, but total debt remains near GDP level, economists warn.”
Burnham and Healey have pledged to stick to former chancellor Rachel Reeves' fiscal rules on spending and borrowing, though Burnham said on Monday he would use "any flexibility within them" to help with policy changes. Shortly after his comments, the yield on 10-year government bonds rose above 5%, hitting 5.03% before slipping back to 5.01% when trading began on Tuesday. In a statement, Healey said "fiscal credibility is the bedrock for economic stability and for national security". Shadow chancellor Sir Mel Stride accused Labour of having "maxed out the nation's credit card and sent borrowing soaring", urging Burnham and Healey to "get borrowing under control". The challenge for the new leadership will be balancing the promise of help for households with the reality of fragile public finances and limited room for manoeuvre.